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Aftershocks, Future Shocks, And Transitions

As the COVID-19 pandemic drags on toward a third year, we consider: What will be the short- and long-term effects on the global economy and credit markets?

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We enter 2022 with largely positive credit momentum, reflecting favorable financing conditions and a powerful economic recovery.

Still, if persistently high cost-inflation forces central banks to aggressively tighten monetary policy, this could trigger significant market volatility and push investors to reprice risk—thus upsetting the benign environment.

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Global Credit Outlook

With favorable financing conditions prevailing, and a powerful economic rebound under way, we enter 2022 with largely positive credit momentum. Still, new COVID variants could undermine confidence and recovery prospects. The weakest areas of credit markets—particularly highly leveraged corporates and some emerging markets—are most exposed, given that they’re often still highly sensitive to the ongoing effects of the pandemic.

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S&P Global Ratings 2022 Credit Outlook Webinar

S&P Global Ratings' leading analysts and economists cover the updated macro-forecasts and our views on key global risks, including inflation, supply chain disruptions, and the debt overhang; China’s shifting policies and its effects on economic growth; climate and energy transition risks; and the ongoing COVID pandemic.


Global Economic Outlook

The global economy is in the midst of a robust but uneven rebound from the pandemic with demand outrunning supply and inflation rising quickly. Central banks in key emerging markets are hiking rates, some aggressively. Persistent high inflation requiring an unanticipated policy adjustment is now the main macro risk. COVID-19 is still with us, but the economic effects of the pandemic are weakening, at least for now—with the new Omicron variant a wildcard.

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Regional Credit Conditions

The robust economic rebound is bolstering favorable financing conditions, amid positive rating trends (with upgrades exceeding downgrades 2-to-1 in 2021) and a lower base default forecast for both the U.S. and Europe (around 2.5% as of September). As record debt issuance in 2021 demonstrates, it’s easy for borrowers up and down the ratings ladder to tap the markets when benign conditions prevail. The question is: What would happen if financing conditions were to tighten sharply, in the event of a central bank policy error, geopolitical risks, or reduced liquidity?

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Asia-Pacific Credit Outlook 2022

China's economic deceleration, global monetary tightening, and the emergence of COVID variants such as omicron pose the biggest risks to Asia-Pacific credit conditions in 2022.

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S&P Global Ratings Asia-Pacific Credit Outlook 2022 Conference

S&P Global Ratings' senior analysts and economist hosted our Asia-Pacific Credit Outlook 2022 Conference on Tuesday, December 7, 2021, where they discuss the key drivers and credit trends across different sectors for the Asia-Pacific credit market in 2022.


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Find more research on the global credit outlook for 2022.