Which Country Has the Best Growth Prospects for 2022?
- By Bilal Hafeez
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- 1 min read
A growing economy makes investing much easier. Equity markets tend to rise, there is more confidence to start new businesses, and risk appetite improves. Moreover, while focusing on near-term growth is tempting, it pays to think further ahead. We think now is the time to focus on 2022. So, if 2020 was the COVID collapse and 2021 the bounce-back, 2022 will be the year to see which economies can maintain their growth path.
Where is most growth expected? Focusing on developed (G10) economies, we find economists’ consensus expects Spain to see the highest growth in 2022 at 5.7%, followed by the UK at 5.4% and Germany at 4.5% (Chart 1). On the other end of the spectrum, Japan is expected to have the weakest growth at 2.5%, then Switzerland at 2.9% and New Zealand at 3.2%.
Another way of looking at growth projections is momentum – which countries are maintaining their growth from 2021. On that score, Germany is actually forecast higher growth in 2022 than 2021, so increasing momentum, while Norway and Japan are maintaining their growth rates. US growth, meanwhile, is forecast to tumble from 6.2% to 4.3%.
These forecasts suggest the US will be more challenging to invest in next year as growth weakens. We also have more political risk with US mid-term elections. European countries like Spain, the UK and Germany, however, offer high growth and in some cases improving growth momentum. So keep an eye on the IBEX, FTSE and DAX indices.
