Global conditions: from recovery to stagflation  The global economy largely weathered the COVID-19 pandemic, making a good recovery in 2021 and into 2022. The initial recovery phase was underpinned by supportive fiscal and monetary policies as well as widespread vaccination. Advanced economies experienced the strongest growth over the past year, while the recovery in emerging markets has been more mixed.
Page - 2 - of 13  At a global level, fully extended fiscal and monetary policies pushed recovery forward, with expansionary policies extended through 2021 and into this year. In tandem with a build-up of savings, aggregate demand expanded aggressively, eventually adding fuel to the fire of supply shortages, and giving fresh impetus to the inflation shock that currently besets the world economy.