IMF lowers global 2022 growth forecast

Edward Bell - Senior Director, Market Economics
Published Date: 26 January 2022


  • The IMF revised its outlook for global growth in 2022 lower to growth of 4.4% compared with 4.9% previously. Downgrades to growth expectations across all advanced as well as large emerging economies were behind the downgrade as the spread of the Omicron variant of Covid-19 has disrupted the growth outlook while high and sustained inflation will also weigh on growth. The growth outlook for the US was cut b 1.2ppts to 4% for this year while the Eurozone showed a 0.4ppt cut to its outlook. China’s growth outlook was lowered by 0.8ppts to 4.8% growth after more than 8% in 2021 while India showed one of the few upgrades with growth expected to be stable y/y at 9%.
  • A full breakdown of regional growth will be available in forthcoming IMF publications but the latest WEO did show the MENA region receiving an upgrade in headline growth projections, up by 0.3ppts to 4.4% this year from 41.% in 2021. Higher oil production, sustained recoveries in the non-oil sectors and much stronger regional balance sheets all look set to support growth this year.
  • Germany’s IFO measure of business expectations improved in January as firms were optimistic that any disruptions related to the Omicron variant of Covid-19 would be relatively short-lived. The business expectations measure of the survey increased to 95.2, better than market expectations. The assessment of current conditions deteriorated month/month although it remains levels recorded at the same period of 2021. Should the effects of Omicron prove as short-lived as the market currently expects then the prospects for a solid bounce back in eurozone economic activity look more assured.
  • In the US, consumer confidence fell slightly in January as the Conference Board measure of consumer activity showed the consumers were still planning on buying homes and other large-ticked items even if near-term economic conditions were a worry. Inflation expectations fell for a second month running. At 113.8 compared with 115.2 in December 2021, the Conference Board index showed its first drop in the last four months but nevertheless remains well above pandemic levels.
  • Ras al Khaimah has set up a new tourism function to regulate “integrated resorts” that will allow gaming for the first time in the UAE. Major US hotel and casino operator Wynn resorts has announced it will build a 1,000-room resort in RAK to be completed by 2026 and will include gaming areas as well as other entertainment options.

Today’s Economic Data and Events

  • 19:00 CA Bank of Canada rate decision: forecast 0.25%
  • 19:00 US new home sales Dec: forecast 760k
  • 22:00 US FOMC rate decision: forecast 0.25%

Fixed Income

  • US Treasury markets showed another day of two-way pricing with yields slipping midway through the day before recovering by the end of US trading. A partial recovery in US equities later in the day also helped to eventually bring yields higher. On the 2yr UST yields added almost 5bps to close at 1.0174% while the 10yr closed essentially unchanged at 1.7689%.
  • The first FOMC meeting of the year concludes tonight UAE time and we don’t expect any change in policy to be announced at this meeting. However, the statement and press conference afterward may line up March as when the Fed is ready to raise interest rates by 25bps. We may also get more indication as to what the Fed plans to do with its enormous balance sheet which is holding at around USD 9trn. How the Fed winds that down and how fast will have a lasting impact on monetary policy beyond just raising rates though we would expect the Fed to try and proceed at an orderly pace to avoid any distortions in market conditions.
  • ADNOC will establish a new entity to allow it to tap bond markets for the first time. ADNOC Murban has been granted a ‘AA’ rating from S&P and has reportedly begun to talk to investors ahead of a potential issuance later this year.


  • Currency markets failed to show much conviction ahead of the conclusion of today’s FOMC meeting. The DXY was generally higher against peers although hardly in any earth-shattering moves. EURUSD extended losses for a second day, falling by 0.22% to 1.1301 while USDJPY held relatively stable at 113.88. GBPUSD received a bid, settling up 0.1% at 1.3501.
  • Commodity currencies showed a mixed performance overnight with USDCAD moving in favour of the loonie, albeit by less than 0.1% as USDCAD fell to 1.2629. AUDUSD saw a similar sized gain to close at 0.7151 while NZDUSD was the notable underperformer, falling by almost 0.2% to 0.6687.


  • It was another volatile day for equity markets ahead of the FOMC meeting, but this time there was no respite for US indices as seen later in the session on Monday. All three benchmark indices closed down, with the NASDAQ dropping -2.3%, trailed by the S&P 500 (-1.2%) and the Dow Jones (-0.2%).
  • By contrast, European equities had a more positive day following Monday’s sell-off, but even the gains recorded there were insufficient to claw back to previous levels. The FTSE 100 added 1.0%, while both the CAC closed 0.7% higher and the DAX 0.8%.
  • There were positive moves locally as the DFM added 0.3% and the ADX 0.1%. Within the region, the Tadawul closed 0.3% higher and Turkey’s Borsa Istanbul added 1.8%.


  • Oil markets failed to show much conviction for much of the day until the API reported a draw in US crude stockpiles for last week. Brent futures then managed to gain and settled up 2.2% on the day to USD 88.20/b while WTI added 2.8% to USD 85.60/b.
  • The API estimates that crude stockpiles in the US fell by 875k bbl last week while gasoline inventories rose by 2.4m bbl. Official data from the EIA will be out later today with markets watching to see if last week’s increase in stocks was a one-off.

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