December 6, 2021

World Economy News Update

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The second half of 2021 has proven to be a busy time for economists who attempt to make predictions about how the year will turn out. Much less certain is whether 2022 holds generally good or bad news for developed and developing nations. Several factors play a role in the recent, major global economic headlines. Besides the COVID pandemic’s continuing impact on all markets, the global climate summit, COP26, recently ended in a shambles. Not one of the major energy producers made a significant commitment. The conference was held in Scotland, where thousands of leaders and their entourages gathered to tackle long-term pollution, climate change issues, and more. Here are several other pertinent economic developments for the final quarter of the year.

Global Inflation is Likely Here to Stay

Crude oil prices are emblematic of the world’s financial state of health in many ways. Since May 2021, per-barrel prices have shot up from below $20 to above $80. That represents an historically fast rise and portends even stronger inflationary pressure for the near term. Inflation continues to work its way into virtually every consumer and producer market, and has picked up steam in the past three months. Average global rates hover around the six-percent mark and are steadily increasing. Consumers who spend the bulk of their disposable income during the holiday shopping season will feel the effect more than anyone else.

Traders and Investors Expect Volatility

Institutional, government, and individual investors all over the world expect significant volatility to continue for late 2021 and into early 2022. For example, trading enthusiasts and speculators who use CFDs (contracts for difference) to predict asset prices will have an easier time than those who buy and sell shares on the open market. The impact of volatility means values and prices can change fast. Because a CFD is a leveraged trading instrument, people can use them to seek profits in markets that are trending up or down. In fact, for most short-term investors, volatility can be a good thing, an environment that offers many opportunities in short time frames.

COVID Won’t Go Away

After more than a year of business and financial decimation at the hands of the COVID pandemic and its forced closures, the newest threat from the virus is related to vaccines. In nearly every nation that has worked to maximize the vaccination rate, hospitals are filling up with patients who suffer adverse reactions. Pharmaceutical companies who earn gargantuan sums from selling their vaccines to national governments have been reluctant to release data on the effectiveness of the mandated shots. Recent announcements by U.S. and other government officials have noted that the intended effects of the medicine have not been universally positive.

Stock Market Indices are Rising

In spite of all the gloomy news, most of the world’s securities market indices have been rising steadily since the early months of 2021, which was when the COVID pandemic made its way out of China and began spreading around the globe. Some investors expect a bubble burst effect soon, while others think the indices will hold strong and rise throughout 2022 but at a slower pace.

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