Global economic output will surpass $100 trillion for the first time in history next year despite the lingering effects of the Covid-19 pandemic, a new report by a UK-based consultancy shows. “A year ago, we hoped that the economic effects of the pandemic would wear off relatively quickly. And in one sense they have. We now expect world GDP in dollars in 2022 to be higher than we did pre-pandemic and to reach over $100 trillion for the first time in that year. Last year our forecast was that this would only be reached in 2024,” the Centre for Economics and Business Research (CEBR) said in its annual World Economic League Table 2022, published on Sunday. According to the report, inflation is another key issue for the global economy going forward. This year has been one of supply constraints and rising inflation, with shortages of commodities, finished goods, shipping space and fossil fuels feeding into inflation in the second half of 2021. While some of these inflation sources cooled in the last weeks of the year, there are signs that wage inflation is accelerating around the world. “The key question is whether inflation will largely subside of its own accord, with a modest degree of policy tightening and possibly a medium-sized fall in asset prices (of about 10 per cent to 15 per cent) but little impact on GDP, or whether bringing it down it will require something close to austerity,” CEBR said. The consultancy expects the push for a greener economy and renewable and cleaner energy capacity boost to shrink consumer spending by about $2tn a year on average through 2036, as companies pass on the cost of decarbonising investments to consumers. “It is probably prudent to conclude that the drive for net zero will at least initially add to consumers’ costs,” the CEBR said. “If we assume that roughly half of the total cost of decarbonising investment is passed on to consumers, this would suggest that real consumer expenditure will be reduced by about $2tn per annum on average over the next 20 years.” According to the report, China is on track to overtake the US as the world’s biggest economy in dollar terms in 2030. India is forecast to pass France next year, while the UK might reclaim its place as the world’s sixth biggest economy in 2023. The report also says Germany could overtake Japan in terms of economic output around 2033. Russia is forecast to enter the top 10 by 2036. CEBR analysts also warn of recession between 2023 and 2024. “We hope that a relatively modest adjustment to the tiller will bring the non-transitory elements under control. If not, then the world will need to brace itself for a recession in 2023 or 2024,” the report states. The International Energy Agency estimates that global energy currently stands at about $2tn per year, about 2.5 per cent of global GDP. Under a scenario in which the energy sector achieves net zero emissions, investments need to rise to $5tn, or 4.5 per cent of global GDP, by 2030 and stay there until at least 2050, CEBR said citing IEA data.