Analysis: What will be the key global trends in 2022?
By Rob Griffin
10:04, 22 December 2021
It has been a strange year. As industries and markets continue to grapple with the ongoing effects of Covid-19 and the emergence of new variants, some key themes have emerged.
Innovative companies have been analysing how they operate and looking for more cost-efficient ways to run their businesses in an increasingly unpredictable world.
So, what will 2022 hold? In a study seen by Capital.com, Oxford Economics has made some bold predictions of what we may see over the coming 12 months. Here we take a look at its main projections.
Services to outpace industry
The study predicted services growth will outpace industrial production over the first half of 2022 now that most economies have started to reopen.
However, there is a large cloud on the horizon in the shape of the Omicron SARS-CoV-2 variant, with Covid cases starting to rise again across the globe.
“The re-imposition of domestic and international travel restrictions over the last few weeks is likely to curtail services activity in the near term – particularly in transportation and hospitality,” the report said.
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All change in the second half
In the second half of the year, however, industrial production growth is expected to outpace services, with strong order data and rising backlogs suggesting it will accelerate.
Of course, this is likely to happen when supply-chain pressures have finally eased, which is expected to happen in the latter part of the year.
Until then, firms will be focusing on “rethinking their business strategies” to overcome input shortages, differentiate among rivals and meet consumer demand.
Semiconductor shortages to continue
It’s been one of the most pressing problems of 2021: the global shortage in semiconductors that has badly affected many industries, including European carmakers.
Oxford Economics points out production was down nearly 30% in the third quarter of 2021, since the start of the year, while demand remains robust.
“We do not expect the lost output to be recouped fully until 2023,” it stated. “Our automotive partners, LMC Automotive, estimate that nearly 10 million cars that would have been sold globally were not built in 2021 for lack of parts and components.”
US automotive recovery
The report noted how the US automotive industry was tackling the semiconductor shortage, with Ford and General Motors reducing electrical features on vehicles that require these chips.
While this “pandemic-driven shift in production strategy” is expected to disappear as semiconductor supply improves, it could be key to reducing supply bottlenecks on businesses going into 2022.
“With the drive towards companies being more sustainable in their operations, it could be that this experience encourages manufacturers to engage in using chips more efficiently in general over the long-term,” it added.
Future chip production
Strong production of electronic components and boards has also led to an estimated double-digit pace of growth in 2021 within South Korea and Taiwan.
“Data from South Korea suggest that production capacity for the manufacture of semiconductors is rising,” stated Oxford Economics. “As we move into 2022, chip production is expected to remain buoyant.”
The report also suggested that with output increasingly faltering in key chip-consuming industries, such as computers, we could be “seeing the end of the semiconductor shortfall” sometime in the second half of next year.
Persistence of transport bottlenecks
The study also highlighted that global trade volumes have recovered, following a sharp decline, and have remained above levels seen in the fourth quarter of 2019 since the end of 2020.
However, it pointed out that ocean transport has struggled to keep up.
“Because the problems are multidimensional – spanning from port and warehouse capacity to the ability of logistics networks to deliver goods to their final consumers – headwinds are expected to persist in the global shipping industry well into the second half of 2022,” it warned.
It also noted how container shipping costs declined over November 2021 for the first time since June 2020.
Oxford Economics also believes there will be greater use of digital twins within the construction industry, which is where virtual simulations of buildings are used to reduce operational costs.
Similar improvements are also likely to be seen within other industries. For example, key players in the courier industry, such as DHL, have increased investment in autonomous forklifts.
“With the rise in e-commerce expected to remain above its pre-pandemic trend, it is likely companies in the transport and logistics industry will invest further in delivery robots over 2022,” it stated.