Global Economic Forecasts: Q3 2021

August 2021

The global 2021 real GDP growth baseline forecast has remained roughly unchanged over the last quarter at 5.8% and real GDP growth of 4.7% in 2022. The stable 2021 global outlook combines major upwards revision to the Eurozone, Brazil and Mexico countered by substantial downgrades to the outlook in India and other Asia Pacific economies. The economic recovery in the baseline forecast would still leave global real GDP more than 2% below the pre-pandemic forecast level in 2022.

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Key findings

Global Outlook

The global 2021 real GDP growth baseline forecast has remained roughly unchanged over the last quarter at 5.8% and real GDP growth of 4.7% in 2022. The strong economic recovery in the baseline forecast would still leave global real GDP more than 2% below the pre-pandemic forecast level in 2022. Furthermore, the momentum of the recovery in 2021 is likely to have peaked.

US

In the baseline forecast, US real GDP is expected to increase by 6.3% in 2021 and by 4.5% in 2022. However, recovery momentum appears to have peaked during the summer due to the rapid spread of the new highly infectious Delta coronavirus variant. As a result, 2021 real GDP growth has been downgraded by 0.4 percentage points relative to the Q2 forecast.

China

Chinese economic activity dynamics in mid-2021 show moderate economic growth, with the bulk of the recovery from the pandemic having occurred in 2020. The government’s priorities have shifted from sustaining the recovery to controlling the continuing fast credit growth, reducing financial system risks, and increasing control over the private sector in key sectors.

Eurozone

Faster vaccination campaigns and rising confidence have boosted the Eurozone recovery. A mismatch between speed of vaccination campaigns and the spread of the new Delta variant is likely to reduce the speed of the recovery at the end of 2021.

 

Scope
Key findings
Global baseline outlook: Recovery likely to have peaked
Vaccination campaign speed and fiscal support differences explain diverging recoveries
Uncertainty continues to decline but remains significant
Real GDP annual growth forecasts and revisions from last quarter - AE
Real GDP annual growth forecasts and revisions from last quarter - EMDE
Inflation forecasts
Central bank interest rates quarterly forecasts
Global risk map: Probability of downside risks mostly stable
Global Risk Index scores and rankings
COVID-19 Optimistic1 scenario: Faster vaccination campaigns and economic recovery
COVID-19 Pessimistic1 scenario: Main downside risk
COVID-19 Pessimistic2 scenario: Worst case scenario
China hard landing: Main non-pandemic risk
US: Recovery likely to have peaked
US: Forecast risks
US: Real GDP back to pre-pandemic level led by consumption recovery
US: Short-term economic activity indicators and consumer confidence signal slower recovery
US: Labour market combines low employment rate with labour shortages in some sectors
US: Inflation has increased substantially, but is expected to stabilise over 5-year horizon
China: Recovery almost complete and government has shifted to longer-term priorities
China: New coronavirus outbreak raises risks of reversal in recovery
China: Forecast risks
China: Slower recovery shifts to services, backed by stable private sector sentiment
China: Economic activity indicators signal slowdown in growth in Q3
India: General outlook
India: Forecast risks
Japan: General outlook
Japan: Forecast risks
Eurozone: Faster vaccination campaigns and rising confidence boost recovery
Eurozone: Forecast risks
Eurozone: Strong recovery in Q2 and early Q3 before the spread of Delta coronavirus variant
Eurozone: Recovery backed by high private sector confidence levels
Eurozone: Business Climate Indicator reaches highest level since 1985 in July
UK: General outlook
UK: Forecast risks
Russia: General outlook
Russia: Forecast risks
Brazil: General outlook
Brazil: Forecast risks
COVID-19 scenarios summary
Definitions
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