World Economy Will Grow Rapidly In 2021

Chart jof world economy 2017-2022


The global economy will accelerate in 2021, though with significant variation around the world. The world will benefit from vaccinations, both directly in fewer illnesses and indirectly as lockdowns and fears subside. It will take most of 2021 and into 2022 for the full benefits of vaccination to be felt, and maybe even longer in poorer countries, but America’s major trading partners should look good next year.

The OECD recently reported, “Prospects have improved over recent months with signs of a rebound in goods trade and industrial production…. Global GDP growth is now projected to be 5.6% this year …. World output is expected to reach pre-pandemic levels by mid-2021.”

The International Monetary Fund predicts similar growth.

Skepticism about the statements of political organizations make sense, but consider the consensus forecast gathered by FocusEconomics. They survey on-the-ground economists around the world, averaging country forecasts and then adding up to a global average. (They also provide regional averages for those interested in, say, South America.) The latest compilation puts world economic growth at 5.2% in 2021 and 4.1% next year. Their forecasters put the greatest quarter-to-quarter gain in the second quarter of this year.

Covid cases and deaths are dropping rapidly around the world as in the United States. The decline in this last surge started well before vaccination, so it was probably a reaction to the high case level (more voluntary caution and government-mandated lockdown) plus the distance from the Christmas holidays.

The greatest vaccination relative to the population has occurred in the U.K. and the U.S. China has a low vaccination rate that is not as worrisome as it may seem because their count of new cases is very low. Although Chinese data are not totally trustworthy, even with substantial misreporting the country is in good shape.

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