Is it the fear of OMICRON only that’s hurting the prospects of the Global Economy? Most of us know the answer but haven’t felt it, and neither allowed it to sink into us.
US Fed is likely to adopt tighter monetary policy initiatives in Q1 2022. Inflation is skyrocketing and is on the verge of reaching one of the highest levels in the recent past. Fed will have very limited options but to raise interest rates. If this happens, we may witness a massive turmoil of the levels not seen anytime in the last few years.
Secondly, China is slowing down. Real estate, the backbone of the country’s economic growth, is on the back foot. Home sales continue to decline, while the real estate companies’ debt levels are on the rise. Beijing’s tightened policies to curb overbuilding, debt and other inconsistencies met with restrained liquidity and default in loans. Many analysts believe that China’s slowing real estate and its ramifications will not impact the global economy, but UBS has other views. The contagion will not remain isolated in China alone. It will so dearly affect the global economy that we will have mass correction across many sectors.