Stagflation in 2022? Probably not

How we position ourselves strategically: The monthly CIO Update analyzes the current market environment and reveals the background. It is presented by Frank Häusler, Chief Strategist, and Sandrine Perret, Senior Economist.

Still an overweight in equities against bonds

“Stagflation” is the buzzword that currently accompanies us all. It is a phenomenon that occurs when stagnation in growth is accompanied by high inflation.

In their baseline scenario 2022, however, our experts do not expect this to happen.

Developed countries should catch up with their pre-pandemic growth trend in 2022, and growth rates in most quarters should remain above the pre-pandemic level. In terms of inflation, we expect “normalization” to occur again from the first quarter of 2022.

Three risks to remain

• Supply bottlenecks could lead to persistent inflation, which will continue in 2022.
• Central banks could act more restrictively, e.g. by raising interest rates.
• China could continue to be exposed to negative events, e.g. vulnerability due to high debt levels.

In this market environment, we continue to maintain our current allocation and confirm our assessments with regard to all asset and subasset classes.