Outlooks 2022

Increasing cyber risks are challenging organizations around the world to fortify their cybersecurity, particularly as remote and hybrid work arrangements create vulnerabilities to computer networks. Cyber insurance costs also continue to climb.

Cyber Outlook

After a turbulent, pandemic-induced 18 months, credit conditions for emerging markets are finally set to stabilize in the year ahead. Find out why the ability to adapt to climate change effects while simultaneously navigating rising political and social risks shape our outlook across regions, sectors and asset classes in the year ahead.

Emerging Markets - Global

2022 outlook – Amid new pledges, action on carbon, social issues to rise to the fore

ESG Outlook

Weaker than expected growth and higher than expected inflation have dented some of the optimism surrounding the global economic recovery. Access the report to see why we expect a stable growth phase through 2023 as uncertainties around the pandemic, supply chain imbalances and labor shortages gradually fade.

Global Macro Outlook

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Corporate Finance

We expect strong operating profit growth, driven by increasing production rates and deliveries of large commercial narrowbody aircraft. Supply chain disruptions and potential new coronavirus variants will weigh on the pace of growth.

Aerospace & Defense – Global

We expect light vehicle sales to rise 6.2% in 2022, with Western Europe bouncing back most after a tepid 2021 recovery. Parts shortages and the pandemic’s course remain risks, but we supply problems will abate and volumes recover in the second half. Read the report to understand how parts suppliers’ revenue growth will fare, as well as our outlook for global truck sales.

Automotive manufacturers and parts suppliers - Global

The industry’s organic revenue growth should average about 2.3% over the next 12-18 months, driving our stable outlook. Capital intensity will rise, driven by investments to protect and grow market share and earnings. Risks include rising competition and slower 5G or fiber infrastructure deployment.

Broadband - US

Our outlook for the global chemicals sector is stable. We expect average EBITDA to return to more normal levels from a 2021 peak and financial conditions to remain supportive.

Chemicals - Global

Credit conditions largely unchanged overall in 2022 for all sectors except sugar/ethanol, which will improve

Commodities - Latin America (includes protein, sugar ethanol and oil and gas)

Our outlook for the sector, which includes the beverage, consumer packaged goods, consumer durables, tobacco and packaged food sectors remains positive thanks to combined operating profit growth of more than 4% in 2022. However, performance is diverging by sector and geography.

Consumer Products – Global

2022 outlook stable but inflation poses hazard as consumer activity regains post-pandemic footing

Consumer, Retail, Telecom - Latin America

Our 2022 outlook for the global diversified information technology sector is positive. Spending on IT infrastructure upgrades will remain strong as businesses look to increase efficiency and competitiveness

Diversified Information Technology - Global

We have changed the outlook for global diversified manufacturing to stable from positive, reflecting concerns about inflationary pressures on input costs

Diversified Manufacturing - Global

High oil prices in 2022 will support robust industry cash flow, but producers will maintain capital discipline, limiting advantages for drilling, oilfield services and midstream companies, while refining companies will benefit from rising fuel demand

Energy – Global

Another strong year ahead for Homebuilding – US. This reflects our expectations of solid business conditions for the sector given supportive macroeconomic environment, including low interest rates despite expected modest increases, improving employment picture, rising wages, favorable demographic trends, and remote work as an additional long-term demand driver for homes.

Homebuilding and Building Materials – US and EMEA

Global hospitality EBITDA will surge 35-40% in 2022 before easing back as conditions gradually normalize. However, the emergence of new coronavirus variants highlights how the virus remains a source of high forecast uncertainty. Read the report for insight into the 2022 outlooks for the cruise, lodging, restaurants, casinos and gaming sectors.

Hospitality - Global (lncludes Gaming, Lodging, Cruise and Restaurants)

We expect EMEA high-yield corporate bond and leveraged loan issuance to level out in 2022 with continued support from M&A activity after a record year in 2021. . Read the report to see how vaccination rates, inflation and supply disruption might affect ongoing recovery efforts.

Leveraged Finance – EMEA

Strong business conditions for global mining, steel and coal; high prices will likely moderate in 2022, but will remain robust, exceeding historical levels

Metals and Mining -Global

China's continued economic recovery from the pandemic is supporting the stable outlook for Chinese corporates in 2022. But, slowing GDP growth, emerging risks -- from policy transition to increased regulatory uncertainties -- and tightened funding access may influence the fortunes of the sector.

Nonfinancial Companies - China

The stable outlook reflects a solidifying recovery, with Asia benefiting from rebounding demand from advanced economies. But policy transitions away from growth and tightening funding access are risks to this growth.

Nonfinancial Companies – Asia (ex Japan)

The outlook for EMEA nonfinancial companies remains stable. This balances strong economic growth, a continued recovery in earnings and a low forecast default rate with more recent inflationary pressures and supply chain disruptions.

Nonfinancial Companies – EMEA

Rising vaccination rate, stabilizing consumer confidence, low interest rates and higher public spending underpin favorable credit fundamentals for nonfinancial companies

Nonfinancial Companies – India

Credit fundamentals will remain stable in 2022 amid strength in commodity prices, a tentative recovery in consumer spending and manageable refinancing risks

Nonfinancial Companies – Indonesia

Economic activity recovering, but tightening funding environment and accelerating inflation pose risks to growth

Nonfinancial Companies – Latin America

Our outlook for nonfinancial companies in North America is stable on strong demand and favorable credit fundamentals, tempered by still-evolving impact of supply demand imbalances and risk of sustained inflationary pressures

Nonfinancial Companies – North America

Our 2022 outlook for the global paper and forest products industry is negative. While we expect earnings growth in paper and paper packaging, it will be offset by the flow through of lower wood product and pulp prices.

Paper and Forest Products – Global

Pent-up demand remains strong, driving our positive outlook. We forecast passenger volumes to return to 2019 levels through 2023. However, the spread of new coronavirus variants will periodically weigh on bookings, temporarily slowing the pace of recovery.

Passenger Airlines – Global

The global pharmaceutical industry’s operating earnings will grow 4%-6% in 2022, driving our positive outlook. Solid underlying fundamentals reflect rising use of innovative medicines and continuing rollout of COVID-related products

Pharmaceuticals - Global

Our outlook for the China property sector is negative as funding access will remain tight during the next six to 12 months due to tightened regulations and increased risk aversion stemming from China Evergrande’s financial distress and defaults by several other property developers.

Property - China

We have changed our outlook for REITs and REOCs in the US and Europe to stable from negative as rental income growth strengthens. Logistics and tech infrastructure will perform most strongly, with retail performance remaining weak for the next 12-18 months.

REITs and REOCs - Global

Median sales and EBITDA growth remain strong, but we our outlook remains stable because inflation and supply chain woes will curb recovery. The recent resurgence in coronavirus cases increases risks to our forecasts.

Retail and Apparel - Europe

As consumers’ pent-up demand eases and cost pressures rise, retail operating income growth is set to slow in 2022. Consumer spending on travel, leisure and entertainment is also likely to take a greater share of wallet. At the same time, the pandemic continues to fuel uncertainty as new virus variants such as Delta and Omicron emerge.

Retail and Apparel – US

We have changed the outlook for the global shipping industry to stable from positive on the back of peaking earnings during 2021. However, we expect earnings to still be considerably higher than pre-COVID-19 levels during the next 12 months.

Shipping - Global

Revenue growth and positive free cash flows keep the outlook stable. Competition and scale benefits will drive consolidation in 2022-23. Free cash flow will also turn positive despite high capital spending as companies rein in shareholder returns.

Telecommunications – Asia Pacific

The outlook for telecom operators in Europe remains negative because we expect only marginal revenue growth in 2022.

Telecommunications – Europe

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Financial Institutions

The outlook remains stable in an improving macroeconomic environment. Growing demand for ESG and alternatives, adaptation to changing client preferences with investments in technology and M&A, and rising digital engagement are all adding support to industry credit conditions.

Asset Management - Global

Stable credit conditions support EM bank fundamentals in 2022

Banks - Emerging Markets

Continued moderate real GDP growth and lower unemployment will support borrowers’ credit quality, and banks have ample loan loss reserves to cover a potential rise in net charge-offs. Capitalization will decline because of shareholder payouts, but remain adequate to buffer stress losses. Robust funding and liquidity will help protect banks against market shocks.

Banks - US & Canada

Subdued recovery, loan quality deterioration and higher sovereign debt pose challenges for African banks over 2022

Banks – Africa

Improving economic conditions, and good capital and liquidity buffers underpin stable outlook for APAC banks

Banks – Asia Pacific

We maintain a stable outlook for most European banking systems as operating conditions consolidate following the sharp rebound in 2021

Banks – Europe

Solid capital, low credit losses and sound liquidity support the stable outlook for banks globally. Risks include a global economic slowdown, high global debt levels and the effects of unwinding government and monetary support measures

Banks – Global

Outlook for GCC banks is stable as the region’s economies recover

Banks – Gulf Cooperation Council

2022 outlook for Latin American banks is stable

Banks – Latin America

The stable outlook reflects the economic recovery underway, the sector’s solid asset coverage ratios, and supportive financial conditions that will keep financing costs relatively low over the outlook period

Closed-End Funds – US

Most issuer outlooks are stable

Finance Companies - Global

Our 2022 outlook for Chinese financial institutions is stable, driven by stable outlooks on banks, life insurers, securities companies and leasing companies, despite negative outlooks on asset management companies and non-life insurers.

Financial Institutions - China

Rising long-term interest rates will alleviate persistent erosion in of insurers’ portfolio yields. Nonetheless, global insurers will continue to lower their dependence on interest rate spreads, accelerated by the global shift in new business mix and the sale of legacy policy portfolios in the US and Europe.

Global insurance

Key credit themes for health insurers in 2022

Health insurance - US

Our outlook on both Nordic P&C and life insurers is stable

Insurance - Nordics countries

Our stable outlook for European life insurers reflects the economic recovery and the sector’s efforts to optimize its business mix. Our negative outlook for the P&C sector reflects profitability pressures as claims frequency and inflation rise.

Insurance – Europe

2022 outlook positive as brokers ride economic growth and favorable P&C rates

Insurance Brokers – Global

2022 outlook stable, as US economic recovery solidifies

Life Insurance – US

Moody’s money market fund outlook is stable, previously negative

Money Market Funds – Global

2022 outlook remains stable as economy recovers and pandemic risks recede

Mortgage Insurance – US

Outlook turns negative, underwriting performance to weaken in 2022

Property & Casualty Insurance - Italy

2022 outlook stable despite inflation-driven increase in auto and home loss severity

Property & Casualty Personal Insurance

Our outlook on the global reinsurance sector is stable. Reinsurance price increases amid a global economic recovery will support reinsurance earnings. The sector’s capitalization remains healthy, underpinning its credit strength.

Reinsurance – Global

Our 2022 outlooks are stable for the three subsectors among US securities firms & market infrastructure providers

Securities Firms & Market Infrastructure Providers – US

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Project & Infrastructure Finance

2022 Outlook revised to positive in wake of traffic recovery

Airports – Europe

2022 outlook stable as social restrictions abate and business conditions improve

Infrastructure - Australia

2022 outlook stable with solid revenue growth and influx of federal aid

Local Governments

2022 outlook stable as regulatory frameworks balance cost and ESG pressures

Power - Asia-Pacific

2022 outlook stable as financial metrics and load demand stabilize

Public Power Electric Utilities – US

2022 outlook stable as performance remains satisfactory

Public-private partnerships (PPP) – EMEA

2022 outlook stable, with limited changes to key regulatory parameters

Regulated Electric & Gas Networks - Europe

2022 outlook stable on sustained regulatory support for robust investment cycle

Regulated Electric and Gas Utilities – US

2022 outlook stable as regulatory certainty balances environmental and social risks

Regulated Water Utilities – UK

2022 outlook stable as fiscal momentum set to offset lingering economic risks

States – US

2022 outlook changed to positive on recovery in traffic volumes

Toll Roads – Europe

2022 outlook positive; strong GDP and CPI growth drives traffic and revenue growth

Toll Roads – US

2022 global transportation infrastructure and project finance outlooks

Transportation Infrastructure and Project Finance

2022 outlook stable as intervention risk, high capex overshadow earnings growth

Unregulated electric and gas utilities – EMEA

2022 outlook revised to stable as higher demand supports power prices

Unregulated Utilities - US

2022 outlook remains positive as domestic travel recovery continues

US Airports

2022 outlook remains positive on elevated cargo volume and revenue

US Public Ports

2022 outlooks – US utilities and power companies

Utilities and Power – Global

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Regional & Local Government

Our outlook for Chinese RLGs is negative, driven by a number of factors including lower land sale revenues and higher debt issuance to fund infrastructure spending. Regional growth will be uneven, reflecting varied economic fundamentals and carbon transition risks. Find out why RLG funding gaps will widen in the coming year.

Regional & Local Governments – China

Our 2022 outlook for French regional & local governments (RLGs) is stable given the strong growth recovery, the normalisation of operating spending and stable debt burdens.

Regional & Local Governments – France

Our 2022 outlook for Italian regional and local governments (RLGs) is stable given the expected recovery in tax revenue, still sizeable central government support and continued deleveraging.

Regional & Local Governments – Italy

Our 2022 outlook for Spanish regional governments is stable, reflecting healthy revenue growth, access to sizeable funding support and low borrowing costs. However, spending pressures are building and debt levels remain high.

Regional Governments – Spain

Our 2022 outlook for German regional governments is stable, reflecting a continued economic recovery that will increase tax revenue, reduce fiscal deficits and contain planned debt accumulation.

Regional Governments (Länder) – Germany

Our outlook for UK housing associations (HAs) in 2022 is stable, underpinned by a supportive operating environment, higher turnover and robust liquidity. However, growing costs pose challenges.

UK Housing Associations

鉴于土地出让金收入将下滑，以及至少短期内政策重新转向举债刺激经济增长的预期，我们对2022年中国地方政府的展望为负面。

中国地方政府 (Chinese translation)

The credit quality of US asset-backed commercial paper (ABCP) will remain strong in 2022, reflecting support providers’ financial health. Consumer financing will remain the leading asset type and economic growth will uphold outstandings.

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Structured Finance

ABCP - US

Conduit credit quality will remain robust on support providers’ strength. Meanwhile, trade receivables will continue to dominate programs’ outstandings.

ABCP — EMEA

Current trends in leveraged lending, CLO documentation and performance will continue into 2022, with issuance set to remain strong. Meanwhile, ESG considerations will proliferate.

CLOs – EMEA

Current trends in leveraged lending and CLO documentation and performance will continue into 2022 following a postpandemic boom in 2021. ESG considerations will proliferate, while Libor transition may slow CLO issuance early on.

CLOs – US

2022 Outlook — Collateral quality and performance bifurcation by property type will continue

CMBS – EMEA

2022 Outlook — Recovery will aid new deals; risk remains for outstanding deals with the pandemic's hardest-hit assets

CMBS and CRE CLOs – US

The positive credit effects of pandemic-sparked consumer support and caution are fading. Fallout from normalizing conditions and evolving credit policies will depend on the degree to which lender maintain discipline and household strength endures.

Consumer ABS – US

Asset quality will stay strong, waning pandemic fallout will aid performance.

Corporate ABS – US

2022 Outlook - Stable issuers, strong assets and new rules will support credit quality

Covered Bonds – Global

The recent home price boom and solid economy will support residential mortgage-backed securities (RMBS) performance but also expand risk in new transactions. Read the report to understand how stretched affordability and increased lender competition as refinancing declines will likely probably weaken underwriting.

RMBS – US

2022 Outlook – Underwriting will normalize while improving economies aid performance

RMBS and ABS – EMEA

As pandemic strains ease, lower unemployment will help uphold new deal credit quality and existing deal performance.

Structured Finance - Canada

Solid economic growth will support stable asset performance for Australian structured finance deals in 2022, but rising debt burdens and possible interest rate rises will be a risk

Structured Finance – Australia

Economic conditions will sustain stable asset performance for outstanding Chinese structured finance deals, though rising household debt and the property sector slowdown will be risks. Loan quality for new deals will vary by asset class

Structured Finance – China

Credit quality, performance will continue to normalise amid economic recovery

Structured Finance – Europe

2022 Outlook — Strong asset performance will continue despite COVID-19 uncertainty

Structured Finance – Global

2022 Outlook - Ongoing economic recovery will be positive but growing inequalities pose risks

Structured Finance – Japan

Mexico’s structured finance sector will benefit in 2022 from the continuation of automatic payroll deductions for residential mortgage-backed securities (RMBS), which dominate the market. Meanwhile, improved labor market conditions will support existing deal performance, though some still-struggling borrowers will default.

Structured Finance – Mexico

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Sovereign

Economic recovery drives stable 2022 outlook for global sovereigns amid ongoing pandemic costs

Global Sovereign Outlook

Our 2022 outlook for Australian regional governments is stable on strengthening revenue as vaccine rollout facilitates reopening of local economy and international borders; rising debt burdens pose a challenge

Regional Governments – Australia

Our 2022 outlook for Canadian regional governments is stable, reflecting normalized economic activity and our expectation of continued federal support to workers, businesses and provinces in case of slower-than-expected growth

Regional Governments – Canada

Roughly half of APAC economies will undergo a growth rebound in 2022, but differing degrees of exposure to vulnerable sectors and disparate approaches to reopening will result in a multispeed recovery. Debt burdens will peak in 2022 and stabilize for most APAC economies at higher levels than before the pandemic. Read the outlook to understand how normalization will involve difficult policy choices for many governments.

Sovereigns - Asia Pacific

2022 outlook stable as strong economic activity and resilient fiscal metrics mitigate structural challenges

Sovereigns – Central & Eastern Europe

Stable outlook on economic recovery and beginnings of fiscal repair; pandemic and politics remain key risks

Sovereigns – Commonwealth of Independent States

2022 outlook is stable given favourable economic and monetary conditions, but debt levels will remain elevated for many

Sovereigns – Euro area

2022 outlook stable on supportive oil prices, higher production; carbon transition momentum magnifies longer-term risks

Sovereigns – Gulf Cooperation Council

2022 outlook stable as growth recovers and debt levels stabilize; political risks rising

Sovereigns – Latin America & Caribbean

2022 outlook negative amid weak economic recovery and growing social discontent

Sovereigns – Levant and North Africa

2022 outlook negative amid fragile recovery, persistent external risks and limited scope for adjustment

Sovereigns – Sub-Saharan Africa

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US Public Finance

2022 outlook stable as emergence from remote learning supports revenue growth

Higher Education

2022 outlook stable driven by federal aid and continued tax growth

Mass Transit – US

2022 outlook stable with revenue recovery despite lingering risks

Nonprofit Organizations

2022 outlook negative as labor costs drive expense growth higher

Not-For-Profit and Public Healthcare – US

2022 outlook remains stable as portfolios recover and strong issuance continues

State Housing Finance Agencies – US

2022 US public finance outlooks mostly stable or positive as revenue continues to recover

US Public Finance

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Work arrangements that have become increasingly commonplace during the pandemic have made cyberattacks easier and more attractive to cybercriminals, fueling a surge in ransomware and distributed denial-of-service-attacks. Those that fail to adapt to the security challenges of the changing workforce will be at increased risk of cyber incidents.

Leroy Terrelonge

Vice President, Senior Analyst
Moody's Investors Service

Cyber Risk – Global

2022 Outlook – Workplace shifts open new attack channels, while insurance costs rise and coverage narrows

Credit conditions are expected to stabilize in the new year, but high leverage and deteriorating financial conditions will increase credit risks for weaker emerging markets.

Ariane Ortiz-Bollin

Vice President, Senior Credit Officer
Moody's Investors Service

Emerging Markets Outlook

Podcast

Moody's expects G-20 economies to grow 4.4% collectively in 2022 and then by 3.2% in 2023, driven by strong household spending, inventory restocking and increased capital spending. The current mismatch between supply and demand as well as persistent labor market shortages should improve over coming quarters, allowing supply-side inflation pressures to moderate

Madhavi Bokil

Senior Vice President, Macro Research Team
Moody's Investors Service

Global Macro Outlook

Moody’s outlook for sovereign creditworthiness for the next 12-18 months has changed to stable from negative as the continuing economic recovery will improve revenues and allow governments to start unwinding some of the extraordinary stimulus they provided in response to the pandemic. However, the far-reaching economic support provided to households and many sectors during the pandemic has left sovereigns with weaker balance sheets. Once growth rates return to the pre-pandemic trend, most sovereigns will struggle to maintain sufficiently large primary fiscal surpluses to recover lost fiscal space before the next major shock.

Alexander Perjessy

Vice President, Senior Analyst
Moody's Investors Service

Sovereigns – Global

The global economic rebound will continue into 2022, easing immediate credit pressures for governments in most regions and enabling a slow unwinding of support measures. Read the analysis to understand the ramifications of the unprecedented levels of government debt, the social and institutional costs of the pandemic, and the differing impacts on advanced and emerging economies.

Podcast

Global credit conditions in 2022 are poised to stabilize, although with stark differences across regions and economic sectors. Steadying economic activity, supported by progress in vaccinations against COVID-19, will drive enhanced credit quality of debt issuers overall. Supply chain issues, labor shortages and inflation pressures resulting from pandemic disruptions will stretch into 2022, but their effects will lessen in the second half of the year.

Elena H Duggar

Managing Director, Credit Strategy
Moody's Investors Service

Global Credit Conditions

Steadying economic activity will enhance the credit quality of debt issuers overall in 2022. However, leverage risks will remain high. Discover how COVID-19's aftershocks will continue to reshape economies, how new technologies will accelerate shifts in corporate operating environments, and how meeting net-zero emissions targets will require massive shifts in policy and investment.

Podcast