ER
ENTERING the second year of the pandemic, the Mastercard Economics Institute has released Economy 2022, a global outlook for the year ahead based on key trends from a consumer perspective.
This report reveals how five fundamental factors – from savings and spending, supply chains, digital acceleration, global travel, and a growing list of economic risks – will continue to shape the global economy. The main findings of this report include:
Savings & Expenses
Consumer spending on savings could contribute to increasing global GDP growth by three percentage points by 2022. The value of household savings will almost double by 2021. How quickly or slowly consumers spend their savings will have an impact on the global economy.
Supply chain
The shift in household spending from goods to services broke the record for the past 27 years, in which its value has fallen six percentage points from its highest peak. The pandemic triggered the growth of goods spending from 39% to 47%. This affects service providers and puts a strain on the supply chain. Mastercard hopes that things can return to normal by 2022 with the opening of national borders and the availability of services that are more accessible and desirable.
Digital
As much as 20% of the digital shift in the retail industry is unchanged, and it is reshaping how consumers shop and what they buy. E-commerce subscriptions increased in 2021, with nearly 88% of countries in 32 markets experiencing a surge in subscription services compared to the previous year.
Car companies, virtual sports partners, bike rentals, and pet services are some of the businesses that benefit from this model. In Indonesia, the share of retail subscriptions from total spending has increased by 1.2x from 2020 to 2021.
Journey
The recovery in travel for holidays continues as international travel opens with medium and long-haul flights starting operations in 2022. A return to travel in 2021 is seen on roads and airports, but the continuation of that growth hinges on viral variants that could prompt travel bans. Mastercard saw rapid recovery rates in domestic travel and short-haul (less than 600 miles), medium-haul (600-1,800 miles) trips driven by the easing of restrictions, while long-distance travel still lags behind.
Risk
The risk remains the potential to disrupt the global economy. New COVID variants like Omicron pose the greatest immediate risks, but Mastercard sees many additional risks that could potentially slow the recovery, including a readjustment of housing prices which have risen 66% over the past two years, spikes in oil prices, fiscal gaps in developed economies, and international tariff wars. .
“The year 2021 is still not back to the normal situation that many people want. But collectively we have made tremendous progress,” said Bricklin Dwyer, Mastercard Chief Economist and Head of the Mastercard Economics Institute.
Globally, Bricklin Dwyer continued that economic growth, vaccine advances and the digital transformation that has made businesses big and small more resilient continue to shape the future. Against this backdrop, Mastercard anticipates consumer demand – and growing purchasing power – to grow and the experience economy returns next year. [sources/photo special]
