Vanguard economic and market outlook 2022: Striking a better balance

Vanguard economic and market outlook 2022

The outlook for the global economy and markets in 2022 will be shaped by how pandemic-driven stimulus measures are withdrawn.

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Download the full report* for Vanguard’s latest expectations and forecasts for 2022.


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As the Covid-19 Omicron variant reminds us, the evolution of health outcomes remains important, while delicate policy decisions will be more crucial as policymakers withdraw monetary and fiscal support.

The global economic recovery is set to continue next year, although at a slower pace – and some regions are more vulnerable than others.

Our full-year 2022 growth forecasts*

US 4%
Euro area 4%
UK 5.5%
China 5%

* Source: Vanguard analysis, as at 31 October 2021.

Looking beyond 2022, our long-term outlook for global asset returns remains guarded – especially for equities. For fixed income investors, however, the outlook is a little brighter than last year.


UK equities
Global equities ex-UK (unhedged)
UK aggregate bonds
Global bonds ex-UK (hedged)
Euro-area equities*
Global equities ex-euro area (unhedged)*
Euro-area aggregate bonds*
Global bonds ex-euro area*

Note: Return projections are calculated for British pound investors. * Return projections are calculated for euro investors.

IMPORTANT: The projections or other information generated by the Vanguard Capital Markets Model® regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. VCMM results will vary with each use and over time.

The VCMM projections are based on a statistical analysis of historical data. Future returns may behave differently from the historical patterns captured in the VCMM. More important, the VCMM may be underestimating extreme negative scenarios unobserved in the historical period on which the model estimation is based. Distribution of return outcomes from the VCMM are derived from 10,000 simulations for each modelled asset class. Simulations are as at 30 September 2021. 

The Vanguard Capital Markets Model® is a proprietary financial simulation tool developed and maintained by Vanguard’s primary investment research and advice teams. The model forecasts distributions of future returns for a wide array of broad asset classes. Those asset classes include US and international equity markets, several maturities of the US Treasury and corporate fixed income markets, international fixed income markets, US money markets, commodities, and certain alternative investment strategies. The theoretical and empirical foundation for the Vanguard Capital Markets Model is that the returns of various asset classes reflect the compensation investors require for bearing different types of systematic risk (beta). At the core of the model are estimates of the dynamic statistical relationship between risk factors and asset returns, obtained from statistical analysis based on available monthly financial and economic data from as early as 1960. Using a system of estimated equations, the model then applies a Monte Carlo simulation method to project the estimated interrelationships among risk factors and asset classes as well as uncertainty and randomness over time. The model generates a large set of simulated outcomes for each asset class over several time horizons. Forecasts are obtained by computing measures of central tendency in these simulations. Results produced by the tool will vary with each use and over time.

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

Past performance is not a reliable indicator of future results.

Simulated past performance is not a reliable indicator of future results.

Any projections should be regarded as hypothetical in nature and do not reflect or guarantee future results

Important information

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