IG Wealth Management 2022 Market Outlook: We Expect Healthy, Measured Growth in the Year Ahead

• Global economy to transition from rapid reopening to normalization
• Equity markets returns expected to be much closer to average
• The bond markets will focus on inflation – but will the central banks?

WINNIPEG, MB, Dec. 16, 2021 /CNW/ - The roll out of COVID-19 vaccines in Canada and around the world, combined with trillions of dollars in fiscal and monetary support from governments contributed to stronger economic growth than anticipated in 2021.  According to IG Wealth Management's ("IG") 2022 Market Outlook, this momentum is likely to continue, albeit milder, in the year ahead as a period of normalization returns.

"After the rapid reopen in 2021, we're embarking on the path to normalization in 2022," said Philip Petursson, Chief Investment Strategist, IG Wealth Management. "Investors should expect generally positive equity markets and a higher interest rate environment, with inflation higher than we've experienced in the last decade."

For its 2022 economic outlook, IG has identified three main themes for investors to watch for in the year ahead:

Transitioning from the rapid reopen to normalization
While 2021 was generally a period of accelerating economic growth, 2022 will see a moderation of that growth. However, the report notes that this does not mean low growth, but rather a slower rate of growth, characterized as a transition from high to normalized growth. Moreover, the combination of a tighter supply chain, low inventory levels, and higher demand for goods indicates economic strength instead of weakness. In short, the report concludes that the Canadian (and global) economy should remain healthy in 2022.

Equity market returns will be much closer to average
Following a strong year in equity markets driven by resurging earnings growth, low interest rates, and plenty of liquidity, IG expects another rewarding year for equity investors. "Coming from the 20 per cent-plus gains in 2021, investors shouldn't be surprised if returns are more moderate and in the mid-single-digit range in 2022," observed Mr. Petursson.

Bond markets: the transitory inflation story that wasn't
While "transitory" was used repeatedly to describe the current inflationary environment, it has become clear that demand-driven inflation is here to stay. That means central bankers will have to catch up, and it also signals another challenging year for bond investors. A diversified approach to fixed income, including areas with higher yield potential, may provide a higher return potential while balancing out interest-rate risks.

"Overall, 2022 looks to be an extension of 2021, but perhaps milder," concluded Mr. Petursson. "The equity bull market is likely to march on, just at a slower pace. And interest rates should continue to move higher, commensurate with prevailing inflation.  The big wild card is how central bankers will respond to this new, inflationary environment that hasn't been seen in decades."

To learn more about IG Wealth Management's 2022 outlook and to view IG's commentary video visit: https://www.ig.ca/en/2022-market-outlook

About IG Wealth Management
Founded in 1926, IG Wealth Management is a national leader in delivering personalized financial solutions to Canadians through a network of advisors located across Canada. In addition to an exclusive family of mutual funds and other investment vehicles, IG offers a wide range of other financial services. IG Wealth Management has $116.5 billion in assets under advisement as of November 30, 2021 and is a member of the IGM Financial Inc. (TSX: IGM) group of companies. IGM Financial is one of Canada's leading diversified wealth and asset management companies with approximately $270 billion in total assets under management and advisement as of November 30, 2021.

This commentary may contain forward-looking information which reflect our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of 11/30/2021. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

SOURCE IG Wealth Management

Hilary Bassett, 416-951-7558, [email protected]; Lara Berguglia (Quebec), 514-994-2382, [email protected]