The EMEA outlook in 2022 remains positive, with a continued recovery in services, strong exports, and a gradual normalization in tourism driving opportunities for MNCs throughout the year. A number of markets—both developed and emerging—are expected to deliver solid growth in 2022 and create opportunities from some pent-up consumer demand. However, slower growth in China, high input prices, and high energy and food prices, plus a potential early interest rate hike by the US Federal Reserve could come together to substantially erode the pace of the recovery during the year, particularly in lower-income markets with tight fiscal positions. MNCs need to ensure that they are closely monitoring for early signs of demand slowdowns and stronger price sensitivity, as planned price increases in a fragile demand environment could result in loss of market share in some segments and geographies.

The recovery will continue into 2022

The region will present a range of opportunities for multinationals as the service recovery strengthens. We expect to see solid growth out of Western Europe; strong performance from Central Europe, Russia, and Kazakhstan; as well as opportunities in Egypt, Saudi Arabia, the UAE, and SSA markets, such as Kenya, Ghana, and Cote d’Ivoire. Overall growth will slow from 2021 levels due to a base effect.

Several factors create considerable uncertainty about the region’s outlook

Companies should be prepared for the risk of deceleration in the recovery, particularly in the second half of the year, as a result of risks that could weigh on growth in the region. These include a sharper slowdown in China, high energy costs, inflation affecting consumer budgets, and political uncertainty. While firms should remain optimistic given underlining conditions, they should monitor demand trends closely throughout the year.

Inflation will weigh on the outlook for the region, posing a risk to the recovery

Inflation levels and their impact on demand will weigh on the outlook for the region. Businesses will continue to experience high operating costs for at least the first half of 2022, including energy, shipping, and component costs. As they pass these costs to customers, we expect some demand destruction to take place, particularly where these are combined with high energy and food prices, as well as rising taxes for B2B customers. Companies need to ensure their pricing decisions reflect that risk.

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