2020 was deeply marked by a pandemic that originated a sudden shock with pervasive effects in the world economy. Nevertheless, the scientific advances and the consequent vaccination campaigns already started renewed hope to overtake this unprecedented crisis.
Thus, 2021 is expected to be a year of recovery, in which uncertainty will play a vital role in what growth prospects are concerned.
According to OECD (2020), the wide distribution of an effective vaccine is the basis for the most optimistic outlook, allowing to enhance confidence and reduce uncertainty. In such scenario, the investment stimulus, accompanied by a decrease for precautionary savings, redirected to boost spending, would lead the way towards a faster recovery, being however, unable to take world GDP back to pre-Covid levels during the current year.
The worst scenario is expected to materialize in the case renewed virus outbreaks intensify, thus implying new measures to contain its spread. Investment and consumption levels would be weakened while financial markets would display greater risk aversion, inducing a decline in global growth prospects in the near-term.
After a decline of the world economy (-4.2%) in 2020, OECD estimates a recovery of global output by 4.2% in 2021, followed by 3.7% in 2022.
Concerning to the main economies, China is projected to present a solid recovery after being the only world economy with growth in 2020. The United States are expected to evidence a similar evolution of its output comparing to the Euro Area, while Japan is expected to maintain lower output growth rates. Therefore, projections reveal a gradual although uneven economic recovery across countries.
- OECD (2020), OECD Economic Outlook, Volume 2020 Issue 2