Together, the following three economic charts tell a rather confusing story about the future.
Three Charts: Global Economic Outlook
1. Global Prices
The world expects elevated inflation levels that could be worrisome. In surveys from May and December during 2021, people from 32 advanced economies and 50 EMDEs expressed their forecast. With the shaded area showing what participants expect, we can see the May answers were above the U.S. two percent target:
2. Global Growth
The World Bank projects a deceleration in growth. Citing paycheck programs and other pandemic initiatives, they say that once the support is withdrawn, growth will slow:
And, we can expect the developing wold to have the most challenging recovery:
3. Global Stock Markets
The MSCI All Country World Index provides a stock market barometer. Here, we don’t need a projection because we already have one. Typically stock price trends reflect investors’ future expectations. The FT graph that follows is based on these large and mid-cap stocks in 23 developed and 24 emerging markets:
At the MSCI website, they tell us the top ten constituents in their index:
With the recent rebound in stock markets, the outlook could be positive:
Our Bottom Line: The Wisdom of Crowds
In The Wisdom of Crowds, former New Yorker columnist James Surowiecki says that crowds can make decisions that are more accurate than individuals. In markets, crowds accurately price sodas and broccoli and tennis lessons. Even for those huge glass jars at county fairs, studies demonstrate that crowds’ guesses cluster around the true number of jelly beans.
We can ask if the crowd will have exhibited similar wisdom through its inflation, growth, and stock market forecasts. However, since there is some disagreement, we have to decide which “crowd” is correct.
My sources and more: The World Bank and WEF gave me the ideas for the charts. Then FT. had more depth on stock markets. And finally, for a fast and interesting read, do take a look at The Wisdom of Crowds.
