Global Economy To See Fastest Growth In 80 Years: 5 ETF Picks

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With billions of people being vaccinated all over the world and massive stimulus flowing, the economy across the globe is strongly recovering from the pandemic. Per Bloomberg data, more than 2.15 billion doses have been administered across 176 countries with 38 million shots being given per day. Better-than-expected earnings, as well as easing of lockdowns and stricter measures, are adding also to the strength.

The JPMorgan Global Manufacturing PMI, compiled by IHS Markit, indicates that the goods-producing sector extended its current run of expansion to 11 months. Notably, the PMI rose to the highest level in more than 11 years to 56.0 in May from 55.9 in April.

The solid economic growth is likely to continue for the rest of the year. According to World Bank, the global economy is expected to expand 5.6% this year — the strongest pace in 80 years. Among the major economies, the United States is expected to grow 6.8% while China’s economy will likely grow 8.5%. Japan is forecast to post 2.9% growth this year while the economies of the 19 European countries that share the euro currency are collectively expected to expand 4.2%.

The emerging market and developing economies as a group are projected to expand 6% this year, supported by higher demand and a spike in commodity prices. Prices for a wide range of commodities from copper to oil to timber have been skyrocketing. Notably, oil price jumped to $70 per barrel for the first time since 2018 on optimism over higher energy demand and tightening supply. Precious metals like gold and silver are also rising on inflation fears as these often act as an inflation hedge. The industrial metals are on a tear as global economic recovery are spurring manufacturing and industrial activities. Meanwhile, agricultural commodities are surging this year buoyed by weather-related supply concerns and higher demand that has encouraged investment fund buying.

However, the recovery in many countries is being held back by a resurgence of COVID-19 cases and slow progress in vaccination. In particular, the growth in low-income economies this year is anticipated to be the slowest in the past 20 years other 2020, partly reflecting the very slow pace of vaccination. World Bank projects these economies to expand by 2.9% in 2021 before rising to 4.7% in 2022.

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