Global Economic Forecasts: Q2 2021

Delivery

This report comes in PPT.

Globalbaseline outlook

The global economic outlook has improved since Q1 2021. Global real GDP growth in 2021 is now expected to be the fastest in more than 40 years, at 5.8% (a 0.5 percentage points upgrade relative to the Q1 forecast), followed by 4.5% growth in 2022 (a 0.4 percentage points forecast upgrade). The forecast upgrade is mainly driven by advanced economies, which are now expected to grow by 5.0% in 2021 (a 1 percentage point increase relative to the Q1 forecast) and by almost 4% in 2022 (a 0.7 percentage points forecast upgrade), compared to the long-term trend growth of 1.5%. In contrast, developing economies’ real GDP growth rate forecast for 2021-2022 has been raised by just 0.2-0.3 percentage points to 6.5% and 5.0%, compared to the long-term trend of 4.1%.

The strong recovery outlook for advanced economies is mainly driven by the US, due to its relatively fast vaccine deployment and the strong fiscal stimulus measures deployed by President Biden. Faster than expected increases in vaccination rates and a reduction in coronavirus infections in the UK have also led to a major upgrade in UK forecasts. Among developing economies, the economic outlook has improved in China, Mexico and Turkey, on the back of stronger than expected recoveries at the end of 2020 and early 2021. the emergence of a major new pandemic wave in India during spring 2021 is, however, expected to cause an economic contraction in Q2, leading to a significant forecast downgrade.