Waiting for the elections

This year promises to be different from the previous two, with new themes starting to dominate the economic debate. The first is the prospect of finally controlling the pandemic, even if COVID-19 does not disappear completely. The second is the emphasis to be placed on controlling inflation, as the strong monetary stimulus implemented at the height of the pandemic starts to be withdrawn. Finally, in Brazil, we will have elections, which may result in major changes in national economic policy. This will consequently increase the level of uncertainty, with significant impacts on activity and asset prices.

In short, we can describe 2022 as a year of transition for the world economy. After a period of very stable and low inflation, inflation reached a historically high level in 2020 and a period of inflationary deceleration is now expected. Additionally, issues associated with the normalization of production chains remain on the radar screen this year, but it is not yet clear how much the economy will have to slow in order to reduce inflation to a level that is still high, but more acceptable from the point of view of central banks. At any rate, we will have to measure optimism in relation to the global situation.

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