13th January 2022 | Business
The eight major issues that will impact the economy in 2022 is Covid-19, climate change, inflation and migration. Reported by CommSec.
The winding back of stimulus, China, the jobless rate and a “regional renaissance” were also listed in CommSec’s Big Issues of 2022 report.
“The aim is not just to forecast where certain economic variables are likely to be in a year’s time. Rather the focus has been to highlight trends, issues and ‘big picture influences that act as threats or opportunities for consumers, investors and businesses alike,” said CommSec.
1. Living with COVID-19
Following hundreds of millions of cases worldwide, CommSec noted that COVID-19 is likely to continue to exist for some time, which means we have to find a way to live with it. That, it noted, includes all aspects of people’s daily lives – work and leisure – and all aspects of economies across the globe.
2. Winding back stimulus
CommSec predicted there would be “constant consideration in the year ahead about retaining, revising and removing the fiscal and monetary measures”, and warned of potential risks from keeping measures in place too long as well as removing these too hastily.
3. The “regional renaissance”
Societal and economic changes driven by the pandemic have led to a “regional renaissance” where net migration and house prices in regional areas have soared. As such, CommSec predicted a key focus for 2022 will be increased investment in Australia’s world-class “AgTech” sector, which could create jobs and new export opportunities for regional Australia.
The property crisis in China and curbs on steel production to reduce pollution in the lead up to the Beijing Winter Olympics will be key issues to watch according to CommSec, along with hopes of a resolution to the trade dispute between Canberra and Beijing.
5. Climate change
Countries will be required to detail new pledges or more ambitious strategies at the COP27 climate change summit in November 2022, while the Morrison government’s climate change strategy is tipped to remain in focus in the lead up to the election.
6. Jobless rate
JobKeeper and other stimulus measures have kept the jobless rate low, but uncertainty on whether it will stall or fall in light of border reopenings will be a major issue in 2022, especially since reaching full employment remains an important component of the RBA’s future interest rate decisions.
While viewed as being transitory or temporary by most central banks, CommSec said that if inflation remains historically high, inflationary expectations could become entrenched at higher levels which would make it harder for central banks to set policy.
CommSec expects there will be “significant discussion on migrant intake targets and strategies” in the coming year with questions surrounding labour shortages, monetary policy and the different strategies being implemented by state and federal governments.
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