Markets in a Minute
How Rising Treasury Yields Impact Your Portfolio
This infographic is available as a poster.
This infographic is available as a poster.
How Rising Treasury Yields Impact Your Portfolio
Since the start of 2021, the yield on the U.S. 10-year Treasury note has climbed to pre-pandemic levels. But what exactly does this mean, and how could it impact your portfolio?
In this Markets in a Minute from New York Life Investments, we explain why Treasury yields are important and which investments may go up or down when yields are rising.
What are Treasury Yields?
Treasury yields are the total amount of money you earn from U.S. debt securities, such as bonds and T-bills. Yields depend on both the security’s price, relative to its face value, and its “coupon” or interest payment.
The 10-year yield is important because it is closely-watched indication of market sentiment. Here’s what leads to changing Treasury yields:
- When investors expect the market to drop, they look for safer investments.
- Due to higher bond demand, prices rise.
- This lowers their yield, as bonds become more expensive than they were before.
The opposite occurs when the market is bullish.
- When investors expect the market to rise, they look for riskier investments.
- Due to less bond demand, prices drop.
- This raises their yield, as bonds become more cost effective.
Currently, Treasury yields are in the latter scenario because investors are confident in a sustained recovery as vaccines are rolled out and the economy reopens.
Investments That May Go Up During Rising Yields
Rising yields can have a number of knock-on effects in the market. Here are the investments that could increase in value when yields are going up.
| Investment | Why could returns potentially increase? |
|---|---|
| U.S. dollar | Rising yields attract income-seeking investors, who must purchase U.S. debt in U.S. dollars |
| Savings accounts | If the economy is growing at a rate that may lead to hyperinflation, the central bank may raise interest rates |
| REITs | While rising rates pose challenges, economic growth typically translates into a higher level of real estate demand |
| Cyclical stocks | Stocks that move with the economy, like banks, tend to do well during economic recoveries |
Cyclical stocks, such as banks, travel, and energy, may all benefit from an economic recovery. This is particularly true for banks if the economy is growing at a rate that exceeds inflation targets, as the central bank may raise interest rates. In turn, this allows banks to earn a higher profit margin because they can charge a higher rate on their loans.
While it is commonly said that real estate investment trusts (REITs) underperform during rising interest rates, the data tells a different story. In four of six periods of sustained rising yields, REITs earned positive returns—and they outperformed stocks in half of them.
Source: S&P Dow Jones Indices
Rising rates do pose challenges, including higher borrowing costs and lower property values.
However, it’s evident that rising rates also have a positive influence on REITs. For instance, rising rates are typically associated with economic growth, which translates to higher real estate demand and higher occupancy rates. This means REITs can see increased earnings and dividends.
Investments That May Go Down During Rising Yields
On the flip side, there are some investments that could decrease in value when yields climb.
| Investment | Why could returns potentially decrease? |
|---|---|
| Bonds | To remain competitive, newly issued bonds offer higher interest rates—making existing bonds less attractive |
| Dividend-paying stocks | Rising rates give an edge to newly issued bonds, creating a historically safer alternative for income-seeking investors |
| Gold | As a safe haven asset, gold is less desirable during market optimism |
| Some growth stocks | Rising interest rates make borrowing more expensive, which may slow company growth |
Existing bonds will likely see declining performance, with higher volatility among long-term government and corporate bonds. Short-term bonds typically see smaller drops. This is because they have less interest rate risk: there’s a smaller probability that interest rates will rise before a short-term bond’s maturity, and they have fewer interest payments that could be affected by rising rates.
Growth stocks, such as those in the technology sector, may also see weaker performance. In fact, value stocks have been outperforming growth stocks since the fourth quarter of 2020, a significant shift from growth’s strong historical performance in recent years.
U.S. Treasury Yields: One Part of the Picture
In addition to being a barometer for investor confidence, Treasury yields can have an important impact on your portfolio.
However, investment performance can vary depending on a number of other economic factors such as inflation and interest rate levels. For example, climbing inflation could lead to higher gold prices, since gold is seen as an inflationary hedge. You may want to consider the full economic picture when you are reviewing your portfolio.
Markets in a Minute
Visualizing the Three Different Types of Inflation
What are the different types of inflation? Which economic forces impact each type? Below, we chart each over modern history.
This infographic is available as a poster.
Visualizing Three Types of Inflation
Inflation is dominating the news as prices hit 40-year highs.
While the price of everyday goods, including food and energy, is the most widely cited type of inflation, other forms exist across the broader economic system.
In this Markets in a Minute from New York Life Investments, we chart three types of inflation and the macroeconomic factors that influence each type.
1. Monetary Inflation
Monetary inflation occurs when the U.S. money supply increases over time. This represents both physical and digital money circulating in the economy including cash, checking accounts, and money market mutual funds.
The U.S. central bank typically influences the money supply by printing money, buying bonds, or changing bank reserve requirements. The central bank controls the money supply in order to boost the economy or tame inflation and keep prices stable.
Between 2020-2021, the money supply increased roughly 25%—a historic record—in response to the COVID-19 crisis. Since then, the Federal Reserve began tapering its bond purchases as the economy showed signs of strength.
| Year | Money Supply | Annual Percent Change |
|---|---|---|
| 2022* | $21.7T | 0.9% |
| 2021 | $21.5T | 12.6% |
| 2020 | $19.1T | 24.8% |
| 2019 | $15.3T | 6.3% |
| 2018 | $14.4T | 3.6% |
| 2017 | $13.9T | 5.3% |
| 2016 | $13.2T | 7.3% |
| 2015 | $12.3T | 5.1% |
| 2014 | $11.7T | 6.4% |
| 2013 | $11.0T | 4.8% |
| 2012 | $10.5T | 8.2% |
| 2011 | $9.7T | 10.2% |
| 2010 | $8.8T | 6.0% |
| 2009 | $8.3T | 1.2% |
| 2008 | $8.2T | 9.3% |
| 2007 | $7.5T | 5.6% |
| 2006 | $7.1T | 6.0% |
| 2005 | $6.7T | 4.7% |
| 2004 | $6.4T | 4.9% |
| 2003 | $6.1T | 5.2% |
| 2002 | $5.8T | 7.4% |
| 2001 | $5.4T | 10.2% |
| 2000 | $4.9T | 6.5% |
| 1999 | $4.6T | 4.5% |
| 1998 | $4.4T | 10.0% |
| 1997 | $4.0T | 5.3% |
| 1996 | $3.8T | 5.6% |
| 1995 | $3.6T | 2.9% |
| 1994 | $3.5T | 0.0% |
| 1993 | $3.5T | 2.9% |
| 1992 | $3.4T | 0.0% |
| 1991 | $3.4T | 3.0% |
| 1990 | $3.3T | 3.1% |
| 1989 | $3.2T | 6.7% |
| 1988 | $3.0T | 7.1% |
| 1987 | $2.8T | 3.7% |
| 1986 | $2.7T | 8.0% |
| 1985 | $2.5T | 8.7% |
| 1984 | $2.3T | 9.5% |
| 1983 | $2.1T | 10.5% |
| 1982 | $1.9T | 5.6% |
| 1981 | $1.8T | 12.5% |
| 1980 | $1.6T | 14.3% |
| 1979 | $1.4T | 0.0% |
| 1978 | $1.4T | 7.7% |
| 1977 | $1.3T | 8.3% |
| 1976 | $1.2T | 20.0% |
| 1975 | $1.0T | -99.9% |
| 1974 | $902B | 5.4% |
| 1973 | $856B | 6.7% |
| 1972 | $802B | 13.0% |
| 1971 | $710B | 13.2% |
| 1970 | $627B | 6.6% |
Indicated by the M2 Money Stock.
*Data as of April 2022.
It’s worth noting that, in theory, increasing the money supply faster than the growth in real output may cause consumer price inflation, especially if the velocity of money (speed at which money exchanges hands) is high. The reason is that there is more money chasing the same number of goods, and this eventually leads to increases in prices.
2. Consumer Price Inflation
Consumer price inflation occurs when the prices of goods and services increase. It is typically measured by the Consumer Price Index (CPI), which shows the average price increase of a basket of goods, such as food, clothing, and housing.
Supply chain issues, geopolitical events, monetary supply, and consumer demand may all affect consumer price inflation.
Rising 8.6% in May year-over-year, the CPI hit its highest level in four decades. Russia’s invasion of Ukraine and COVID-19 have caused extensive disruption in supply chains, from oil to wheat, leading to increased price pressures worldwide.
| Year | CPI Annual Percent Change |
|---|---|
| 2022* | 8.6% |
| 2021 | 4.7% |
| 2020 | 1.2% |
| 2019 | 1.8% |
| 2018 | 2.4% |
| 2017 | 2.1% |
| 2016 | 1.3% |
| 2015 | 0.1% |
| 2014 | 1.6% |
| 2013 | 1.5% |
| 2012 | 2.1% |
| 2011 | 3.2% |
| 2010 | 1.6% |
| 2009 | -0.4% |
| 2008 | 3.8% |
| 2007 | 2.9% |
| 2006 | 3.2% |
| 2005 | 3.4% |
| 2004 | 2.7% |
| 2003 | 2.3% |
| 2002 | 1.6% |
| 2001 | 2.8% |
| 2000 | 3.4% |
| 1999 | 2.2% |
| 1998 | 1.6% |
| 1997 | 2.3% |
| 1996 | 2.9% |
| 1995 | 2.8% |
| 1994 | 2.6% |
| 1993 | 3.0% |
| 1992 | 3.0% |
| 1991 | 4.2% |
| 1990 | 5.4% |
| 1989 | 4.8% |
| 1988 | 4.1% |
| 1987 | 3.7% |
| 1986 | 1.9% |
| 1985 | 3.5% |
| 1984 | 4.3% |
| 1983 | 3.2% |
| 1982 | 6.1% |
| 1981 | 10.3% |
| 1980 | 13.5% |
| 1979 | 11.3% |
| 1978 | 7.6% |
| 1977 | 6.5% |
| 1976 | 5.7% |
| 1975 | 9.1% |
| 1974 | 11.1% |
| 1973 | 6.2% |
| 1972 | 3.3% |
| 1971 | 4.3% |
| 1970 | 5.8% |
| 1969 | 5.5% |
| 1968 | 4.3% |
| 1967 | 2.8% |
| 1966 | 3.0% |
| 1965 | 1.6% |
| 1964 | 1.3% |
| 1963 | 1.2% |
| 1962 | 1.2% |
| 1961 | 1.1% |
| 1960 | 1.5% |
| 1959 | 1.0% |
| 1958 | 2.7% |
| 1957 | 3.3% |
| 1956 | 1.5% |
| 1955 | -0.3% |
| 1954 | 0.3% |
| 1953 | 0.8% |
| 1952 | 2.3% |
| 1951 | 7.9% |
| 1950 | 1.1% |
| 1949 | -1.0% |
| 1948 | 7.7% |
| 1947 | 14.4% |
| 1946 | 8.5% |
| 1945 | 2.3% |
| 1944 | 1.6% |
| 1943 | 6.0% |
| 1942 | 10.9% |
| 1941 | 5.1% |
| 1940 | 0.7% |
| 1939 | -1.3% |
| 1938 | -2.0% |
| 1937 | 3.7% |
| 1936 | 1.0% |
| 1935 | 2.6% |
| 1934 | 3.5% |
| 1933 | -5.2% |
| 1932 | -10.3% |
| 1931 | -8.9% |
| 1930 | -2.7% |
*Data for 2022 shows the year-over-year change from May 2021 to May 2022.
When consumer price inflation gets too heated, the central bank may increase interest rates to curtail spending and allow prices to cool down.
3. Asset-Price Inflation
Finally, asset-price inflation represents the price increase of stocks, bonds, real estate, and other financial assets over time. While there are a number of ways to show asset-price inflation, we will use household net worth as a percentage of GDP.
Often, a low interest rate climate creates a favorable environment for asset prices. This can be seen over the last decade as low borrowing costs were met with rising asset prices and strong investor confidence. In 2021, household net worth as a percentage of GDP stood at 620%.
| Year | U.S. Interest Rate | Household Net Worth as a % of GDP |
|---|---|---|
| 2021 | 0.1% | 620% |
| 2020 | 0.1% | 510% |
| 2019 | 1.6% | 520% |
| 2018 | 2.4% | 520% |
| 2017 | 1.3% | 510% |
| 2016 | 0.6% | 490% |
| 2015 | 0.2% | 490% |
| 2014 | 0.1% | 480% |
| 2013 | 0.1% | 450% |
| 2012 | 0.1% | 430% |
| 2011 | 0.0% | 440% |
| 2010 | 0.1% | 430% |
| 2009 | 0.1% | 410% |
| 2008 | 0.1% | 460% |
| 2007 | 3.1% | 490% |
| 2006 | 5.2% | 480% |
| 2005 | 4.1% | 460% |
| 2004 | 2.0% | 450% |
| 2003 | 0.9% | 410% |
| 2002 | 1.2% | 430% |
| 2001 | 1.5% | 420% |
| 2000 | 5.4% | 440% |
| 1999 | 4.0% | 420% |
| 1998 | 4.1% | 420% |
| 1997 | 5.8% | 390% |
| 1996 | 6.3% | 390% |
| 1995 | 4.7% | 370% |
| 1994 | 4.9% | 380% |
| 1993 | 2.9% | 380% |
| 1992 | 2.7% | 380% |
| 1991 | 4.1% | 380% |
| 1990 | 5.5% | 380% |
| 1989 | 8.0% | 370% |
| 1988 | 9.0% | 370% |
| 1987 | 6.9% | 380% |
| 1986 | 14.4% | 360% |
| 1985 | 13.5% | 340% |
| 1984 | 8.7% | 340% |
| 1983 | 9.9% | 360% |
| 1982 | 11.2% | 350% |
| 1981 | 13.1% | 340% |
| 1980 | 22.0% | 330% |
| 1979 | 14.8% | 330% |
| 1978 | 10.8% | 330% |
| 1977 | 6.5% | 330% |
| 1976 | 4.2% | 330% |
| 1975 | 5.4% | 340% |
| 1974 | 3.9% | 340% |
| 1973 | 9.8% | 360% |
| 1972 | 5.5% | 360% |
| 1971 | 3.0% | 360% |
| 1970 | 3.0% | 350% |
| 1969 | 5.0% | 360% |
| 1968 | 4.0% | 350% |
| 1967 | 4.5% | 360% |
| 1966 | 5.0% | 350% |
| 1965 | 4.6% | 370% |
| 1964 | 4.0% | 370% |
| 1963 | 3.3% | 380% |
| 1962 | 3.0% | 380% |
| 1961 | 2.5% | 390% |
| 1960 | 3.0% | 370% |
| 1959 | 4.0% | 380% |
| 1958 | 2.4% | 390% |
| 1957 | 3.0% | 370% |
| 1956 | 3.0% | 370% |
| 1955 | 2.5% | 360% |
Interest rates indicated by the Effective Federal Funds Rate
Sometimes rising asset prices can be a misleading sign of a strengthening economy since no real output is produced. Instead, this may indicate an asset bubble.
How the Types of Inflation Impact You
With monetary inflation, businesses and consumers have more money at their disposal, which could then boost demand and further increase inflation in the overall economy.
However, the degree that this impacts consumer price inflation can be unclear. Over the last decade, the money supply ballooned but consumer price inflation stayed relatively stable. Instead, supply shocks seen with COVID-19 and the invasion of Ukraine have had a more immediate effect. The effect of this scarcity in goods has made prices more sensitive to demand. This can be seen with gasoline prices at record highs.
When it comes to asset price inflation, a significant increase to the monetary supply and low interest rates are likely factors behind rising asset prices, among other variables. Yet as the Federal Reserve takes a more hawkish stance on monetary policy, the future of asset price inflation remains to be seen.
Markets in a Minute
Mapped: Economic Predictions for 2022 and Beyond
Global GDP growth is forecast to drop from 6.1% in 2021 to 3.6% in 2022. This map shows economic predictions for 2022 and beyond by country.
This infographic is available as a poster.
Economic Predictions for 2022 and Beyond
How resilient will countries be in 2022? Economies have to contend with commodity shortages related to the Russia-Ukraine war, supply chain issues due to lockdowns in China, and tightening monetary policy as inflation rises.
In light of these challenges, the International Monetary Fund (IMF) has lowered its economic predictions for 2022 and beyond. The IMF predicts that global GDP growth will slow from 6.1% in 2021 to 3.6% in 2022 and 2023.
In this Markets in a Minute from New York Life Investments, we explore GDP projections by country. It’s the second in a two-part series that explores GDP growth around the world.
GDP Forecasts by Country
Due to the war in Ukraine, the IMF notes that the economic predictions for 2022 and beyond have considerable uncertainty. The projections also assume that the conflict remains confined to Ukraine and that the pandemic’s health and economic consequences lessen during 2022.
Here are the IMF’s predictions for real GDP growth by country. Unsurprisingly, Ukraine will have the most severe contraction of -35% this year. Russia’s invasion has damaged or destroyed 30% of the nation’s infrastructure, and more than 14 million people have fled their homes.
| Jurisdiction | 2022P | 2023P |
|---|---|---|
| Afghanistan | n/a | n/a |
| Albania | 2.0% | 2.8% |
| Algeria | 2.4% | 2.4% |
| Andorra | 4.5% | 2.7% |
| Angola | 3.0% | 3.3% |
| Antigua and Barbuda | 6.5% | 5.4% |
| Argentina | 4.0% | 3.0% |
| Armenia | 1.5% | 4.0% |
| Aruba | 2.7% | 3.7% |
| Australia | 4.2% | 2.5% |
| Austria | 2.6% | 3.0% |
| Azerbaijan | 2.8% | 2.6% |
| Bahrain | 3.3% | 3.0% |
| Bangladesh | 6.4% | 6.7% |
| Barbados | 11.2% | 4.9% |
| Belarus | -6.4% | 0.4% |
| Belgium | 2.1% | 1.4% |
| Belize | 5.7% | 3.4% |
| Benin | 5.9% | 6.2% |
| Bhutan | 4.4% | 4.5% |
| Bolivia | 3.8% | 3.7% |
| Bosnia and Herzegovina | 2.5% | 2.3% |
| Botswana | 4.3% | 4.2% |
| Brazil | 0.8% | 1.4% |
| Brunei Darussalam | 5.8% | 2.6% |
| Bulgaria | 3.2% | 4.5% |
| Burkina Faso | 4.7% | 5.0% |
| Burundi | 3.6% | 4.6% |
| Cabo Verde | 5.2% | 5.8% |
| Cambodia | 5.1% | 5.9% |
| Cameroon | 4.3% | 4.9% |
| Canada | 3.9% | 2.8% |
| Central African Republic | 3.5% | 3.7% |
| Chad | 3.3% | 3.5% |
| Chile | 1.5% | 0.5% |
| China | 4.4% | 5.1% |
| Colombia | 5.8% | 3.6% |
| Comoros | 3.5% | 3.7% |
| Costa Rica | 3.3% | 3.1% |
| Croatia | 2.7% | 4.0% |
| Côte d'Ivoire | 6.0% | 6.7% |
| Cyprus | 2.1% | 3.5% |
| Czech Republic | 2.3% | 4.2% |
| Democratic Republic of the Congo | 6.4% | 6.9% |
| Denmark | 2.3% | 1.7% |
| Djibouti | 3.0% | 5.0% |
| Dominica | 6.8% | 5.0% |
| Dominican Republic | 5.5% | 5.0% |
| Ecuador | 2.9% | 2.7% |
| Egypt | 5.9% | 5.0% |
| El Salvador | 3.0% | 2.3% |
| Equatorial Guinea | 6.1% | -2.9% |
| Eritrea | 4.7% | 3.6% |
| Estonia | 0.2% | 2.2% |
| Eswatini | 2.1% | 1.8% |
| Ethiopia | 3.8% | 5.7% |
| Fiji | 6.8% | 7.7% |
| Finland | 1.6% | 1.7% |
| France | 2.9% | 1.4% |
| Gabon | 2.7% | 3.4% |
| Georgia | 3.2% | 5.8% |
| Germany | 2.1% | 2.7% |
| Ghana | 5.2% | 5.1% |
| Greece | 3.5% | 2.6% |
| Grenada | 3.6% | 3.6% |
| Guatemala | 4.0% | 3.6% |
| Guinea | 4.8% | 5.8% |
| Guinea-Bissau | 3.8% | 4.5% |
| Guyana | 47.2% | 34.5% |
| Haiti | 0.3% | 1.4% |
| Honduras | 3.8% | 3.5% |
| Hong Kong SAR | 0.5% | 4.9% |
| Hungary | 3.7% | 3.6% |
| Iceland | 3.3% | 2.3% |
| India | 8.2% | 6.9% |
| Indonesia | 5.4% | 6.0% |
| Iraq | 9.5% | 5.7% |
| Ireland | 5.2% | 5.0% |
| Islamic Republic of Iran | 3.0% | 2.0% |
| Israel | 5.0% | 3.5% |
| Italy | 2.3% | 1.7% |
| Jamaica | 2.5% | 3.3% |
| Japan | 2.4% | 2.3% |
| Jordan | 2.4% | 3.1% |
| Kazakhstan | 2.3% | 4.4% |
| Kenya | 5.7% | 5.3% |
| Kiribati | 1.1% | 2.8% |
| Korea | 2.5% | 2.9% |
| Kosovo | 2.8% | 3.9% |
| Kuwait | 8.2% | 2.6% |
| Kyrgyz Republic | 0.9% | 5.0% |
| Lao P.D.R. | 3.2% | 3.5% |
| Latvia | 1.0% | 2.4% |
| Lebanon | n/a | n/a |
| Lesotho | 3.1% | 1.6% |
| Liberia | 4.5% | 5.5% |
| Libya | 3.5% | 4.4% |
| Lithuania | 1.8% | 2.6% |
| Luxembourg | 1.8% | 2.1% |
| Macao SAR | 15.5% | 23.3% |
| Madagascar | 5.1% | 5.2% |
| Malawi | 2.7% | 4.3% |
| Malaysia | 5.6% | 5.5% |
| Maldives | 6.1% | 8.9% |
| Mali | 2.0% | 5.3% |
| Malta | 4.8% | 4.5% |
| Marshall Islands | 2.0% | 3.2% |
| Mauritania | 5.0% | 4.4% |
| Mauritius | 6.1% | 5.6% |
| Mexico | 2.0% | 2.5% |
| Micronesia | -0.5% | 2.8% |
| Moldova | 0.3% | 2.0% |
| Mongolia | 2.0% | 7.0% |
| Montenegro | 3.8% | 4.2% |
| Morocco | 1.1% | 4.6% |
| Mozambique | 3.8% | 5.0% |
| Myanmar | 1.6% | 3.0% |
| Namibia | 2.8% | 3.7% |
| Nauru | 0.9% | 2.0% |
| Nepal | 4.1% | 6.1% |
| Netherlands | 3.0% | 2.0% |
| New Zealand | 2.7% | 2.6% |
| Nicaragua | 3.8% | 2.2% |
| Niger | 6.9% | 7.2% |
| Nigeria | 3.4% | 3.1% |
| North Macedonia | 3.2% | 2.7% |
| Norway | 4.0% | 2.6% |
| Oman | 5.6% | 2.7% |
| Pakistan | 4.0% | 4.2% |
| Palau | 8.1% | 18.8% |
| Panama | 7.5% | 5.0% |
| Papua New Guinea | 4.8% | 4.3% |
| Paraguay | 0.3% | 4.5% |
| Peru | 3.0% | 3.0% |
| Philippines | 6.5% | 6.3% |
| Poland | 3.7% | 2.9% |
| Portugal | 4.0% | 2.1% |
| Puerto Rico | 4.8% | 0.4% |
| Qatar | 3.4% | 2.5% |
| Republic of Congo | 2.4% | 2.7% |
| Romania | 2.2% | 3.4% |
| Russia | -8.5% | -2.3% |
| Rwanda | 6.4% | 7.4% |
| São Tomé and Prìncipe | 1.6% | 2.8% |
| Samoa | 0.0% | 4.0% |
| San Marino | 1.3% | 1.1% |
| Saudi Arabia | 7.6% | 3.6% |
| Senegal | 5.0% | 9.2% |
| Serbia | 3.5% | 4.0% |
| Seychelles | 4.6% | 5.6% |
| Sierra Leone | 3.4% | 4.3% |
| Singapore | 4.0% | 2.9% |
| Slovak Republic | 2.6% | 5.0% |
| Slovenia | 3.7% | 3.0% |
| Solomon Islands | -4.0% | 3.2% |
| Somalia | 3.0% | 3.6% |
| South Africa | 1.9% | 1.4% |
| South Sudan | 6.5% | 5.6% |
| Spain | 4.8% | 3.3% |
| Sri Lanka | 2.6% | 2.7% |
| St. Kitts and Nevis | 10.0% | 4.7% |
| St. Lucia | 9.7% | 6.0% |
| St. Vincent and the Grenadines | 5.0% | 6.4% |
| Sudan | 0.3% | 3.9% |
| Suriname | 1.8% | 2.1% |
| Sweden | 2.9% | 2.7% |
| Switzerland | 2.2% | 1.4% |
| Syria | n/a | n/a |
| Taiwan Province of China | 3.2% | 2.9% |
| Tajikistan | 2.5% | 3.5% |
| Tanzania | 4.8% | 5.2% |
| Thailand | 3.3% | 4.3% |
| The Bahamas | 6.0% | 4.1% |
| The Gambia | 5.6% | 6.2% |
| Timor-Leste | 2.0% | 3.6% |
| Togo | 5.6% | 6.2% |
| Tonga | -1.7% | 3.0% |
| Trinidad and Tobago | 5.5% | 3.0% |
| Tunisia | 2.2% | n/a |
| Turkey | 2.7% | 3.0% |
| Turkmenistan | 1.6% | 2.5% |
| Tuvalu | 3.0% | 3.5% |
| Uganda | 4.9% | 6.5% |
| Ukraine | -35.0% | n/a |
| United Arab Emirates | 4.2% | 3.8% |
| United Kingdom | 3.7% | 1.2% |
| United States | 3.7% | 2.3% |
| Uruguay | 3.9% | 3.0% |
| Uzbekistan | 3.4% | 5.0% |
| Vanuatu | 2.2% | 3.4% |
| Venezuela | 1.5% | 1.5% |
| Vietnam | 6.0% | 7.2% |
| West Bank and Gaza | 4.0% | 3.5% |
| Yemen | 1.0% | 2.5% |
| Zambia | 3.1% | 3.6% |
| Zimbabwe | 3.5% | 3.0% |
Guyana, a country of less than 800,000 people in South America, is forecast to have the highest GDP growth of 47.2% in 2022 and 34.5% in 2023. The country has begun to rapidly develop its offshore oil industry, with oil earnings estimated to make up nearly 40% of its GDP.
In Asia, India is projected to see strong growth of 8.2% in 2022 and 6.9% in 2023. The growth is supported by government spending and economic reforms, such as lowering the corporate tax rate and allowing more foreign direct investment. In fact, foreign direct investment reached a record $84 billion in 2021-22.
Meanwhile, the IMF predicts that GDP growth in the U.S. will hit 3.7% in 2022 and 2.3% in 2023. The Russia-Ukraine war is expected to slow growth in America’s trading partners, reducing their demand for American goods. The central bank has also withdrawn U.S. monetary support faster than expected as rates rise to combat inflation. Even still, the IMF expects that the U.S. will reach its pre-pandemic trend output path by 2022.
Supporting Growth
Certainly, there are a number of risks facing the global economy. Countries with strong fiscal and monetary support, as well as countries with in-demand exports, have some of the best economic predictions for 2022 and beyond.
The IMF also offers countries various recommendations in order to support growth. For instance, central banks can offer clear interest rate guidance to minimize surprises that disrupt the markets. Governments can continue offering targeted fiscal support to vulnerable populations, such as refugees and households most impacted by the pandemic.
Over the longer-term, countries can focus on reskilling their workforce for the digital transformation, investing in renewables for the green transition, and improving the resiliency of global supply chains.
-
Markets in a Minute2 years agoThe Pyramid of Equity Returns: Almost 200 Years of U.S. Stock Performance
-
Markets in a Minute2 years agoVisualizing the 200-Year History of U.S. Interest Rates
-
Markets in a Minute2 years agoAll S&P 500 Sectors and Industries, by Size
-
Markets in a Minute2 years agoBlack Swan Events: Short-term Crisis, Long-term Opportunity
-
Markets in a Minute2 years agoVisualizing the Hierarchy of Financial Needs
-
Markets in a Minute2 years agoThe Psychological Pitfalls of a Market Cycle
-
Markets in a Minute2 years agoAsset Class Risk and Return Over the Last Decade (2010-2019)
-
Markets in a Minute2 years agoAnimated Map: An Economic Forecast for the COVID-19 Recovery (2020-21)
