2022 Predictions – Economic Outlook for 2022

4/22/2022 12:00:00 AM

2022 predictions – Economic outlook for 2022

Economic forecasts are subject to the unknown, but with GDP growth estimates of between 4% and 7% we start 2022 cautiously optimistic.

I think we will see the supply chain difficulties of 2021 continue into H2 2022. Led by a world shortage of containers, it is exacerbated by China’s zero Covid policy - they closed the world’s second largest port after a single positive test.

Following Covid19 restrictions UK businesses had depleted stocks which has led to shortages and delays fulfilling orders, which I predict will begin to resolve by mid 2022.

With interest rates creeping up, Sterling should remain stable and exports will increase about 4%. However, corporate insolvencies in the UK are expected to exceed 20,000, and globally Atradius is anticipating failures rising by 32%, as internationally, Government support packages end.

Increasing manufacturing costs due to price increases on raw materials, delays of essential in-bound components causing delays fulfilling orders, increased staff costs and shortages in the UK due to Brexit and rising interest rates will fuel these failures. In the UK, manufacturing, hospitality, food production and retail are likely to be hardest hit as are those construction and service businesses that priced contacts some time ago and will face cost over-runs and delays.

I predict many of these failures will come without warning. In the past a decline was noticeable in a deteriorating pattern in a company’s accounts. We have not had a “normal” year of trading since 2019 and these problems will, I feel, cause a rapid and terminal blow to cash flow.

Credit Insurance will be a crucial tool for companies in 2022, to help them identify those highly geared and unprofitable businesses that will to service their debt and those who are showing signs of cash flow distress, and mitigate the impact when failures occur.

Sources:

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About the author

Mark Brannon Cert CII is a respected industry leader with over 17 years’ industry experience in a variety of roles within the business insurance sector. He works across a wide spectrum of insurance product and policy development, delivery and optimisation for clients, including claims, insurer relationships, marketing and communications, and risk management.

Economic outlook for 2022