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Weekly Economic Perspectives: A Synchronized But Incomplete Recovery

Chief Economist
Investment Strategist
Head of Policy Research

A Synchronized But Incomplete Recovery

Following a 3.4% contraction in 2020, the global economy is poised for a sharp rebound this year. We expect global real GDP growth (PPP weights) to hit 5.7% in 2021; if materialized, this would mark the fastest expansion rate since 1973. It will be not only fast, but also broad, with essentially all economies participating in this rebound. While the pace of vaccine deployment varies widely across countries, we believe these disparities will narrow substantially during the second half of the year as the front-runners level off and the lagards catch up. Thus, the evolution of cases and vaccinations will have a bearing on how powerful the rebound will be, but should not preclude a recovery.

We must not confuse momentum and breadth with completedness, however. Admittedly, China has already exceeded its peak pre-Covid GDP, and the United States is poised to cross that mark around mid-year, but many other economies do not get there until late this year or even 2022. A permanent output loss due to the pandemic will be a longlasting scar on the global economy. And so, despite its impressive pace, this will remain an incomplete recovery for a long while yet.