In 2022, global economic growth will almost halve, according to experts from the International Monetary Fund, and over the past 12 months, the global economy has faced a number of shocks.
Widespread Western sanctions against Moscow led to a record rise in energy prices and accelerated global inflation, while developed countries, trying to contain price spikes, began to raise interest rates for the first time in a long time.
Now experts do not rule out a transition to a new, large-scale crisis due to measures taken by developed countries, in particular, an increase in interest rates.
According to the International Monetary Fund, global GDP increased by 6% at the end of 2021, but over the past 12 months, the index has added only 3.2%, and the index is expected to slow down to 2.7% in 2023.
International Monetary Fund CEO Kristalina Georgieva said on Dec. 9: “The latest figures point to the possibility of a further slowdown (in global economic growth). We are also facing a very high state of uncertainty.”
“The global economy has recently gone through a series of shocks as the coronavirus pandemic followed a sting operation in Ukraine and accelerating inflation in most countries, which in turn pushed up the cost of living and tightened global financial conditions.”
A similar view is shared by World Bank President David Malpass, who believes that in the current environment, the prospects for the global economy for the future remain difficult. it is fraught with years of slow growth and wide asset price revisions.”
One of the main events of 2022 is the start of the Russian military operation in Ukraine, and Alexander Abramov, an expert at the RANEPA Institute for Applied Economic Research, believes that “the hostilities and the events that followed them (sanctions) had a significant impact on the economy of both Russia and the whole peace.”
Over the past 10 months, Western countries have imposed more than 10,000 restrictive measures against Russia, and now Russia faces about 13,100 – more than the sanctions imposed on Iran, Syria, North Korea, Venezuela, Myanmar and Cuba combined.
The restrictions affected, in particular, the banking industry, the financial sector, energy, aviation and trade in Russia. Western countries also froze Russia’s gold and foreign exchange reserves in the amount of $300 billion, and Western companies announced their withdrawal from Russia.
At first, large-scale restrictions imposed on Moscow caused a panic in the financial markets in Russia, so the Russian authorities hurried to implement a set of measures to support the Russian currency, including obliging Russian exporters to sell 80% of export sales, which helped to achieve a balance between the supply of foreign currency abroad and demand on them in the Russian market and easing pressure on the ruble.
In early July, the dollar was only 51 rubles and the euro below 54 rubles, after hitting its highest levels on March 12 at 120.37 rubles to the dollar and 132.95 rubles to the euro.
The Russian Ministry of Finance expects the Russian economy to contract by 2.7% in 2022, and Russian Finance Minister Anton Siluanov said that Russia’s GDP in 2022 will fall by 2.7%.
For his part, Speaker of the State Duma of the Russian Federation Vyacheslav Volodin said that the economy and political system in Russia successfully passed 2022, despite the broad sanctions imposed.
After the introduction of Western sanctions, the Russian financial authorities expected a tough scenario, since the Central Bank of the Russian Federation in April last year predicted a fall in the Russian economy in 2022 by 8% – 10%, and the Ministry of Economic Development expected a decline of 7.8%. , but the actual drop turned out to be less than these expectations, and the authorities began to improve the forecast.
Embargo on Russian oil!
In an attempt to put pressure on Moscow, Western countries began to massively refuse to buy Russian oil. The United States was the first to announce such a decision, then Canada, Australia and the United Kingdom joined the initiative, and after that the European Union introduced a partial embargo on supplies.
For its part, OPEC has warned of the dangers of such initiatives, as today there is no excess capacity in the world to replace oil from Russia. Western sanctions against Russia have exacerbated the shortage in the global oil market, and against this background, the price of Brent crude oil rose in 2022 to a record level, the highest since 2008.
Amid skyrocketing oil prices, many countries faced skyrocketing fuel prices, leading to record increases in the prices of goods and services. For example, inflation in the United States rose above 9% at some point in 2022 for the first time in 40 years, while the rate in the European Union reached 11.5%, the highest level in history.
interest rate risk
In an attempt to curb inflation, developed countries began to tighten monetary policy in 2022, as the US Federal Reserve (Fed) raised interest rates seven times in 2022 to 4.5% – 4.75%, the highest level in 15 years, in turn, the European Central Bank raised interest rates four times and reached 2.5% for the first time since 2008.
Tightening monetary policy is one of the main tools to combat rising prices, and as a result of higher rates, borrowed money becomes more expensive for citizens and companies, which leads to a weakening of economic activity and puts pressure on inflation.
But such measures pose a serious threat to the global economy, according to experts from the United Nations Conference on Trade and Development (UNCTAD).
“Changes in the monetary and fiscal policies of advanced economies could push the world into a global recession and prolonged stagnation, more damaging than the financial crisis of 2008 and COVID-19 in 2020,” the organization said.
Departure of Western brands from Russia
The year 2022 was marked by the departure from Russia of a number of brands from various fields: from goods for newborns to construction equipment, and among the brands that left Russia were IKEA, Coca-Cola and McDonald’s. , while some companies, such as Renault, decided to transfer their business to Russian structures for symbolic amounts, leaving themselves the opportunity to buy it out after a few years.
Despite leaving the companies, public opinion polls showed that only 6.7% of citizens suffer from withdrawal syndrome.