The global energy and food crisis, central banks’ interest rates hike to cope with inflation and the establishment of the COP27 “loss and damage” fund, were among the top 10 world economic events in 2022.
1. World faces energy and food crisis
The Russia-Ukraine conflict that broke out in late February 2022 has pushed up global food and energy prices. Gas prices rose nearly five times on March 7 compared to before the conflict. The Food and Agriculture Organisation (FAO) Food Price Index in March hit a new high of 159.3 points. The retaliatory sanctions between the US, Europe and Russia have caused oil and gas supplies to drop and their prices to rise sharply. Geopolitical tensions and natural disasters have disrupted global supply chains, exacerbated inflation, and resulted in growth slowdown.
2. Central banks hike interest rates to cope with inflation
The US Federal Reserve (Fed) on March 16 approved a 0.25 percentage point rate hike, the first increase since 2018. In 2022, the Fed raised interest rates seven times to a range of 4.25-4.5%, the highest since 2007. On July 21, the European Central Bank (ECB) also raised interest rates for the first time in 11 years, and then increased rates three more times that year. To ease decades-high inflation, central banks have hiked interest rates after keeping them close to 0% to support economic growth during the pandemic.
3. Euro falls below US dollar
The euro fell to a two-decade low of 0.9880 against the US dollar due to Europe facing an energy crisis and the risk of a serious economic recession amid the Russia-Ukraine conflict. The interest rate gaps and government bond yields in the US and Europe have prompted investors to shift from the euro to the US dollar.
4. COP27 agrees “loss and damage” fund to tackle climate impacts
The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27), which took place in Egypt from November 6-20, approved an agreement on climate change, notably an initiative on the establishment of a “loss and damage” fund, providing financial assistance for developing nations stricken by climate change.
5. China’s 20th Communist Party Congress adopts important economic decisions, policies
The 20th Congress of the Communist Party of China in October 2020 was an important event for China as the world’s second largest economy has embarked on building a modern socialist country. One of China's most important tasks in the next five years is to invest heavily in technology to modernise its economy and improve growth quality.
6. OPEC makes largest production cut since 2020
Members of the Organisation of the Petroleum Exporting Countries (OPEC) and OPEC Plus agreed in Vienna, Austria, on October 5 to slash oil production by 2 million barrels per day, equal to 2% of global supply from November 2022. This was the biggest cut by OPEC Plus since April 2020 in a bid to shore up prices. The decision has raised concern over oil supply, exacerbated inflation, and held back global growth.
7. Global gold price sets new record
The world gold price touched a record of 2,078.8 USD/ounce on March 8. Inflationary pressures and geopolitical uncertainties have boosted investment demand in gold, which is considered a safe haven. However, this upward trend did not last long as the strong US dollar and the tendency to raise interest rates by major central banks have made gold lose its shine.
8. Cryptocurrencies face uncertain future
One of the world's biggest cryptocurrency exchanges, FTX, on November 11 filed for bankruptcy protection in the US. Bitcoin on November 22 fell to 15,480 USD, its lowest level over the past two years. Digital-asset lender BlockFi on November 28 also filed for bankruptcy protection in the US, citing FTX's collapse and volatility in the crypto markets.
9. Global stock markets fall sharply
The MSCI All Country World Index (MSCI ACWI), an international equity index, on June 6 dropped 21% from the record level set in November 21 to 597.64 points. Since then, the world stock markets have fallen into a long-term downtrend amid high inflation. The wave of sell-offs have been seen in stock markets globally as investors worried that the Fed would move faster on interest rates. The International Monetary Fund warned that the market would goes into “hibernation” if the economic downturn worsens.
10. Billionaire Elon Musk buys Twitter
Billionaire Elon Musk completed his 44 billion USD takeover of Twitter Inc on October 27. After the purchase, he laid off 50% of staff and raised fees for users. His new management policy has forced many partners to stop or suspend advertising on Twitter. According to the Bloomberg Billionaires Index, a daily ranking of the world's richest people, Musk’s dropped to 169.8 billion USD as of November 22, losing 100.5 billion USD from earlier this year, which was an unprecedented decline in wealth in Bloomberg's billionaire rankings./.
VNA
