If 2021 may have suggested for a moment that the page of Covid-19 might be turned with a strong rebound in economic activity in several parts of the world, the Omicron variant cooled the enthusiasm at the end of the year. 2022 opens with in its wake, the lot of uncertainties accumulated in 2021.
Starting with the evolution of the health situation and the restrictive measures that may still have to be imposed. After the crazy year 2020 marked by the recession, 2021 was that of an economic recovery hampered by the Delta and then Omicron variants. Massive disruption of supply chains, strong tensions on supply: raw materials or intermediate goods have become too scarce.
As a result, all over the world, we have reached levels of inflation never seen in years. As in the United States, where, at more than 6%, its level worries the Central Bank. The FED has warned that it stands ready to control it by increasing its key rates next summer if necessary. By that, she intends to calm things down following the record soaring stock markets this year.
As for the euro zone, the Central Bank plans to remain accommodative to support growth
In addition to Omicron, which has stood out, the economic recovery seen in 2021 is running out of steam. European countries will be able to benefit from the EU’s ambitious economic support program. And the European Central Bank does not seem close to raising key rates as soon as its American counterpart.
France expects a difficult start to the year with the rapid dissemination of Omicron, but the Ministry of the Economy forecasts a growth of 4% for this year, relying in particular on the control of the pandemic and vaccination generalized. The year 2022 in France might also be the year of salary increases, as in the United States where jobs that do not find takers are legion. In the hotel and catering industry, for example, these increases might reach + 16%.
But in parallel, several price increases are expected
And not only in France. Inflation, which is hardly harmful as long as it is limited, seems to be here to stay. Depending on the upsurge in the epidemic, it may increase or decrease. 2021 saw energy and commodity prices soar. Between poor harvests and transport costs, this affects basic products such as coffee, oils or meats.
Pasta, it should increase in France by 7% for example. Ditto for clothes because of the high cost of cotton, or even household appliances and cars because of the shortage of semiconductors. Not to mention the explosion in gas prices. If in France, the State intervened to limit the effects on the population, this is not the case in the most economically vulnerable countries where these price increases will be sorely felt.
China to celebrate New Year in three weeks, under the sign of the Tiger
And it is also under the sign of weakened growth. By Omicron, first. Or rather by the zero Covid-19 strategy maintained by the authorities in order to prevent any resurgence of the epidemic. In this context, household consumption promises to remain sluggish, while at the same time, the government continues to support the economy. It remains to be seen whether in 2022, there will be fewer factories closing in Asia under the effect of Covid-19, as we have been able to deplore several times in 2021.
Otherwise, supply problems will remain a reality in 2022. Finally, we must not forget the geopolitical uncertainties which by definition also make 2022 unpredictable: the tensions around Taiwan and those surrounding Ukraine with their effects on gas supply.
Sri Lanka calls for rescheduling of debt to China as a result of shortages
Short of money and taken by the throat by the rise in the price of oil which allows it to run its generators, the country has exhausted its foreign exchange reserves. He had to ration food in supermarkets and electricity. Hence this desperate appeal to Beijing, its first bilateral donor, who has loaned it at least $ 25 billion since 2015.
Cash-strapped Sri Lanka called for rescheduling its huge financial debt to China in talks with Chinese Foreign Minister Wang Yi on Sunday, the country’s presidency has announced. .
The island’s economy, heavily dependent on tourism, has been hit hard by the Covid-19 pandemic and the depletion of its foreign exchange reserves has resulted in food rationing in supermarkets and shortages of essentials.
China is Sri Lanka’s largest bilateral lender and Wang’s visit comes following a warning from international rating agencies that President Gotabaya Rajapaksa’s government might be on the verge of default.
« The President stressed that it would be a great relief if debt payments might be rescheduled given the economic crisis that followed the pandemic. Mr. Rajapaksa’s office said in a statement.
At this time, the Chinese Embassy in Colombo has not commented on this request.
Sri Lanka’s foreign exchange reserves fell to just $ 1.5 billion by the end of November, barely enough to pay for a month of imports.
The island’s main energy supplier began rationing electricity on Friday following running out of foreign exchange to import oil for its thermal generators.
Commitments to China until April 2021 accounted for around 10% of Sri Lanka’s external debt, which weighs $ 35 billion, according to government data. The total amount of debt might be significantly higher, however, following taking into account Chinese loans to Sri Lankan state-owned enterprises and the country’s central bank.
Sri Lanka borrowed heavily from China in the decade leading up to 2015 – under the chairmanship of Mr. Rajapaksa’s older brother, Mahinda – to build ambitious infrastructure projects, some of which have turned into “white elephants. “, that is to say projects which have turned out to be more costly than beneficial and whose operation or maintenance has become a financial burden.
Unable to repay a $ 1.4 billion loan for the construction of a port in the south of the island, Colombo was forced to lease the facility to a Chinese company in 2017 for … 99 years .
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