Key themes 2022: Strong recovery amid shifting risks

Diminishing economic disruption and uncertainty, stemming from the pandemic and ensuing supply-side bottlenecks, bode well for a still-strong recovery in 2022, according to Oxford Economics. But next year will herald a new phase in the recovery, driven by distinct shifts in the key macroeconomic trends.

Tighter fiscal policy will be a common thread across advanced economies (AEs) as emergency-support measures are unwound. Fiscal consolidation is never pain free, and the 2022 squeeze may be stiffer than a decade ago.

And the unwinding of excess savings accumulated by households may soften the blow from tighter fiscal policy. As these savings were unplanned, households may be more willing to spend than normal increases in wealth. But many of the past decade’s problems reflected a global savings glut, suggesting that the household savings unwind could easily underwhelm.

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