Economic Environment¹

Global economic growth in 2022 was impacted by the outbreak of the war in Ukraine and rising inflation and interest rates worldwide. Increasing energy and raw materials prices made many products more expensive and dampened consumers’ purchasing power. European chemical production fell sharply due to drastic increases in regional gas prices.

Global gross domestic product (GDP) grew by 3.0% compared with the previous year (2021: +6.1%). Global industrial production added 2.5% (2021: +6.2%), while global chemical production expanded by only 2.2% (2021: +6.1%). The average price for a barrel of Brent crude oil increased to $101 per barrel (2021: $71 per barrel). Gas prices in Europe averaged €124.16 per MWh ($38.01 per mmBtu) for the year, more than double the prior-year level and more than ten times the 2020 level.

Trends in the global economy in 2022

Global economic development in the course of 2022 was exceptionally volatile and characterized by strong regional differences. Macroeconomic developments were driven by a number of key, overlapping factors: the outbreak of the war in Ukraine, the recovery from the coronavirus pandemic in the advanced economies, China’s long commitment to a zero-COVID policy and the repercussions of the strong fiscal stimuli in previous years. The spike in energy prices, especially natural gas prices in Europe and prices on the inter­­na­tional LNG markets, significantly impacted the development of indus­trial activity. Overall demand was also dampened by the sharp rise in inflation rates and rising interest rates in almost all countries (with the exception of China and Japan). The upturn in inflation rates was mainly driven by higher energy prices, with bottlenecks on the labor and goods markets also playing a role. The strong U.S. dollar drove up inflation in all countries that imported goods and raw materials from the dollar area.

Despite the crises and the weak growth momentum in the course of 2022, many countries still reported comparatively high annual growth rates in their statistics.

The global economy fluctuated over the course of 2022 and saw significant regional differences. Gross domestic product in the European Union initially increased significantly, while the United States started the year with a technical recession. This reversed in the second half of the year. The European economies grew only weakly, and macroeconomic activity in the United States accelerated slightly. In the emerging markets of Asia, economic development was volatile throughout the year. This was mainly driven by gross domestic product in China: A solid start to the year was followed by a decline in the second quarter, and, after a renewed recovery in the third quarter, there were again strong braking effects toward the end of the year.

Economic trends by region

In the European Union (E.U.), GDP grew by 3.6% in 2022 (2021: +5.3%). In the first half of the year, the catch-up effects of the corona­virus pandemic had a positive impact on the services sector and on traditional vacation countries. GDP rose by 3.9% and 5.5% in Italy and Spain, respectively, and by 2.7% even in France. In Germany, by contrast, GDP increased by only 1.9%. German industrial production was down slightly overall. In the energy-intensive industries, production actually declined sig­nificantly due to the drastic rise in energy prices. Due to high service imports from foreign tourism and weaker growth in demand for goods from abroad, net exports did not contribute to growth. Investment also remained weak. By contrast, private consumption grew by more than 4%. This was mainly due to catch-up effects in the services sector. However, consumer and business sentiment became increasingly clouded by rising energy prices and economic uncertainty resulting from the war in Ukraine.

The Eastern E.U. countries recorded comparatively strong growth of over 4% (2021: +6.1%). However, economic activity slowed considerably in the course of the year as a result of weaker export and consumer demand and double-digit inflation rates.

In the United Kingdom, sharp increases in the cost of living dampened private consumption. Industrial production declined in the course of the year and investment was impacted by the sharp rise in interest rates. Thanks to a dynamic recovery in the services sector, the economy nevertheless grew by 4.1% (2021: +7.6%).

Developments in Russia were strongly influenced by the international sanctions imposed as a result of the Russian attack on Ukraine. GDP sank by an estimated 3.1% in 2022. Negative economic effects in the wake of the trade and financial sanctions imposed by the United States and the E.U. were partly offset by rising raw materials prices and the substitution of goods imports by domestic production.

In the United States, GDP fell in the first two quarters of 2022 compared with the second half of 2021. Goods consumption and housing investment declined. Foreign trade also had a strong negative impact on growth in the first quarter. By contrast, services consumption made a consistently positive contribution. The U.S. economy picked up in the second half of the year, mainly due to a stronger foreign trade surplus and solid private consumption. Overall, the U.S. economy grew by 2.1% in 2022 (2021: +5.9%).

Economic developments in the emerging markets of Asia were mixed. In China, growth was repeatedly weighed down by restrictions under the government’s zero-COVID strategy. A positive first quarter of 2022 was followed by a drop in GDP in the second quarter as a result of lockdowns in many Chinese cities. By contrast, the third quarter saw a dynamic recovery. In the fourth quarter, rising infection rates and the abrupt change of course in the zero-COVID policy again led to a weaker economic performance. Overall, GDP growth in China remained well below its medium-term growth path at 3.0%. The weak economy and ongoing travel restrictions in China also dampened growth in many other countries in the region, which have close trade relations with China. Nonetheless, the other emerging Asian economies achieved overall growth of 5.5%.

Recurring waves of coronavirus infections also impacted growth in Japan (+1.2%) and South Korea (+2.6%). Industrial production was also depressed by supply problems in the automotive and electronics industries and weaker foreign demand.

In South America, growth picked up in the first half of the year, supported by high raw materials prices and catch-up effects in private demand. Private consumption in Brazil was also boosted by government transfers and tax cuts ahead of the presidential elections. In Argentina, private consumption also continued to grow strongly despite high inflation and interest rates. However, eco­nomic activity in the region weakened significantly in the second half of the year. Overall, South America’s GDP grew by 3.7% (2021: +7.7%).