The world economic picture in 2022 is divided into two distinct halves: the first 6 months of the year and the last 6 months of 2022. Entering the beginning of 2022, the global economy will recover and grow strongly after a year of recession because Covid-19 pandemic. However, since mid-2022, when the Russia-Ukraine conflict intensified, the combination of China's "Zero Covid" policy slowed down the global economic recovery, increased supply disruptions and pushed up the supply chain. world commodity prices increased sharply. Rising world commodity prices (including oil, food, and food) along with disruptions to the global supply chain increase production costs, causing global inflation to rise rapidly, many countries witnessed record inflation in many years. This has led central banks to implement fast and strong monetary policy tightening to control inflation.

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1. World economy declines, risk of stagnation on a large scale
This situation is concentrated in a few large economies because the size of these
economies contributes greatly to global growth, has a wide and multidimensional
impact and impact on the rest of the world. gender.
The US economy grew positively in the third quarter of 2022, after a decline in the
first half of 2022. However, there are beginning to be signs that consumption - the
mainstay of the US economy, accounts for more than 60% of the country's GDP is
starting to wane. According to data released by the US Department of Commerce in
October 2022, the US gross domestic product (GDP) adjusted year-on-year,
increased by 2.6% in the third quarter of 2022, after falling 1.6% in in the first quarter
of 2022 and decreased by 0.6% in the second quarter of 2022. This can be
understood that the US has escaped the technical recession 1 in the third quarter of
2022. Even so, many economists still warn that does not mean the US economy is
out of danger of falling into a recession in the near future. Because, the biggest
contribution to GDP growth rate in the third quarter of 2022 comes from the balance
of trade, in which imports decrease, exports increase; Consumer spending grew at a
slower rate. Regarding inflation, after peaking in June 2022, it started to have a
decreasing trend until October 2022, but still remained at a high level compared to
the same period in recent years. In the context of inflation continuously rising and
reaching record milestones, the US Federal Reserve (Fed) has implemented a fast
and strong interest rate increase to prevent and control inflation .. As the world's
economic locomotive and the USD accounting for 88% of global foreign currency
transactions, the Fed plays the role of the world's central bank, the Fed's monetary
policy is also considered a guideline for banks. other central authorities to adjust
accordingly. (Figure 1)

2. Figure 1: US inflation rate (% over the same period)
Source: Trading Economics
China's economy grew faster than forecast, but inflation continued to show signs of
accelerating. GDP in the third quarter of 2022 increased by 3.9% compared to the
previous quarter, recovering from a decrease of 2.7% in the second quarter of 2022.
The third quarter of 2022 saw the strongest quarterly growth rate since the second
quarter of 2020, thanks to a series of policies and stimulus packages from Beijing to
revive economic activity. Although the economic growth was higher than expected,
domestic consumption declined due to the epidemic (first 9 months of 2022, the
average consumption of people in Chinese cities decreased by 0.2% compared to
the same period last year). 2021), export growth slows down, and the real estate
market's difficulty may negatively affect economic prospects in the fourth quarter of
2022 and 2023. Besides, the purchasing management index (PMI) is continuous.
reduced from June 2022; By September and October 2022, it fell below the threshold
of 50 points, showing that manufacturing and service activities continue to shrink
gradually. China's economy is still facing challenges on many fronts, both internally
and externally, including the Zero Covid strategy, moderate exports, a persistent real
estate crisis and global recession risks due to tightening policies of central banks
around the world.
The euro area economy is weakening, inflation has risen to a record level since the
euro was officially introduced in 1999. This is the region with the third largest
economic scale in the world. after the US and China. In 2021, GDP in the euro area
will account for more than 15% of global GDP. GDP growth in the third quarter of
2022 of the euro area stood at 0.2%, marking 6 consecutive months of positive
growth,

3. Figure 2: Manufacturing PMIs for Europe, China and the US
Source: Investings.com
2. Risks, global instability increase
As analyzed above, global inflation in major major economies is at record highs. It
can be seen that inflation is the biggest macro challenge and a persistent risk in the
next few years. This makes most of the central banks in the world choose to tighten
monetary policy to curb inflation. From the beginning of 2022 to November 24, 2022,
there were 334 interest rate adjustments globally, of which there were 321 increases
and only 13 decreases. Although central banks make efforts to control inflation
through monetary and interest rate tools, however, the effectiveness is still limited
when there is still a shortage of supply of many commodities and materials.
necessary.
In the currency market, the USD appreciated at the highest rate since 2000, causing
many currencies of many countries to depreciate sharply. At one point, the Japanese
Yen depreciated nearly 30% against the USD, the Yuan depreciated 15%, the EUR
depreciated 13%, the Taiwan dollar -16%, Thai Baht -15%, Korean Won -20% ...
USD appreciation creates certain advantages for some exporting countries, but in
general, it has unfavorable impacts on the world economy, especially emerging
economies. Firstly, the strong appreciation of the USD causes an increase in
imported inflation (through the cost of importing input materials), thereby increasing
domestic inflation pressure, leading to the risk of macroeconomic instability. tissue.
Second, in order to keep the domestic currency's price, many countries have to
intervene in foreign exchange. Global foreign exchange reserves fell by a record $1
trillion,

4. Figure 3: Economic growth forecast in 2022 - 2023
Source: IMF and WB
Specifically, according to the IMF's forecast, some major economies will be sharply
reduced. The US is forecast to grow by 1.6% in 2022 and 1% in 2023. Some
estimates suggest that the US may fall into a recession in the first quarter of 2023.
China is expected to grow 3.2% in 2022, 0.1% lower than the previous forecast; in
2023 it will increase by 4.4%, down 0.2% compared to July 2022. More than
one-third of the global economy has a downward trend in growth between 2022 and
2023.
1 Two consecutive quarters of GDP decline as the first half of 2022 for the US
economy meets the definition of a technical recession.
2 The Fed raised the base rate five times in 2022, from near zero to more than 3%
today. Fed policymakers expect rates to rise to around 4.4% by the end of 2022 and
4.6% by the end of 2023.