The coming year is expected to continue the economic recovery trend. According to Credit Suisse’s investment forecast for 2022, the global economy is expected to grow by 4.3%. Although a number of central banks have begun to retreat from the policies adopted at the time of the epidemic, interest rates are expected to remain close to zero in most developed economies. In light of this, stock returns will remain attractive, although they are expected to be more moderate than last year.
The global economy is expected to remain stable in 2022, amid strong demand, support for fiscal and monetary policy and easing corona restrictions. The bank expects the shares to provide attractive single-digit returns to investors supported by high profits “against the background of an increase in corporate profitability.” In addition to the so-called post-epidemic transition, we believe that 2022 will mark the beginning of a significant transition to a world where the issue of sustainability plays an increasing role for consumers, businesses, governments and regulators. In this context, we expect that environmental, social and governmental trends will be critical and investors will continue to include sustainability considerations in capital allocation.
Michael Strobeck, Chief Investment Officer of Credit Suisse, said: “In light of the ongoing economic recovery, we expect equities to provide attractive returns in 2022, a forecast that warrants adequate exposure to all asset types in portfolios. “Following non-traditional investment patterns to diversify their investment opportunities array. In view of the growing climate crisis, policies must be more climate-focused, a development that investors must take into account in their investment decisions.”
Ninet Hechler-Feidherb, Investment Manager at the International Capital Management Division and Head of Economics and Global Research at Credit Suisse, stated: .
Credit Suisse forecast for major economies and currencies:
United States: Credit Suisse expects that the real growth rate of gross domestic product in the United States in 2022 will stand at about 3.8%, given a decline in services recovery and supply chain problems delaying the final stages of the general recovery from the plague. Inflation is expected to slow to 3.9% after an extreme jump in 2021. The dollar is expected to enjoy an exchange rate advantage over currencies of other developed countries as the Federal Reserve withdraws from the monetary policy it has taken so far during the plague.
Eurozone: The eurozone is expected to grow by 4.2% in 2022 when the economy eventually overcomes persistent supply chain problems that have led to a sharp rise in inflation. The European Central Bank (ECB) is expected to start reducing its asset purchase plans in 2022. The euro, on the other hand, will start 2022 fairly soft against the dollar, but will stabilize and recover later this year, in line with European Central Bank policy.
Switzerland: The Swiss economy is expected to record significant growth in the coming months while a decline in unemployment rates will support consumer spending. Growth in world Swiss GDP will reach 2.5% in 2022. The Swiss central bank is expected to continue to intervene in the foreign exchange market if necessary and the Swiss franc is not expected to rise significantly against the euro.
China: After a strong recovery, China has experienced a renewed slowdown due to problems in its real estate sector as well as regulatory changes and policy reforms that we expect to continue in 2022 and could adversely affect the country’s growth. Expected growth stands at about 6.1% in 2022 and we expect Chinese currency to keep On stability or will weaken slightly in the first half of the year against the dollar.
Japan: The Japanese economy is expected to grow by 1.7% in light of additional incentives by the new government to support economic recovery. The Japanese currency will weaken against the dollar in 2022.
Forecast for major asset rates:
Stock markets will yield single-digit returns in 2022, more moderate than in 2021, while continuing to provide an attractive risk premium on bonds.
Bond yields are likely to provide negative returns in 2022. In credit, low investment margins and high yields will hardly compensate for the risks associated with higher yields. Credit Suisse prefers European bonds linked to inflation and senior loans.
Commodities: Demand in commodities is expected to be supported in 2022 in light of expectations for continued growth in above-average global industrial production and inventory replenishment needs. The price of carbon will remain a major issue, while gold may be vulnerable with the onset of normalization in monetary policy.
Alternative Investments: The real estate sector will continue to enjoy still low interest rates as well as sustained economic recovery. The economic background will also support private markets, while hedge funds are expected to provide relatively modest returns close to the historical average.