According to Pictet, 2020 marked the end of a 40-year period of low inflation and disinflation stretching back to the early 1980s, following the oil shocks of the 1970s. This period saw the global economy experience the “Great Moderation” from the early 1980s to 2000, followed by a period of disinflation as it recovered from the GFC.
The global economy saw one of its quickest economic recoveries on record in 2021, bouncing back from the devastating effects of the Covid-19 pandemic that began the year prior. This was due in large part to strong monetary and fiscal policy responses around the world, which helped prevent similar levels of economic scarring that persisted long after the global financial crisis (GFC) of
2008 to 2009.
Unfortunately, this recovery has been hamstrung by an increasing lack of geopolitical stability, upon which the global economy thrives. Pictet Wealth Management, the wealth management arm of Geneva-based Pictet Group, says in its 2022 edition of Horizon that its 10-year view on economies is that higher inflation and moderate growth are “on the menu”, with the macro shocks experienced this year setting the foundation for higher structural inflation.
