The global economy is expected to recover slowly from the collapse caused by the COVID-19 pandemic. Output is expected to expand 4% in 2021 but will remain more than 5% below pre-pandemic projections. The pandemic likely caused lasting damage to potential growth. In particular, the shock to investment and human capital is eroding growth prospects in emerging market and developing economies (EMDEs) and setting back key development goals. The global recovery, which has been dampened in the near term by a resurgence of COVID-19 cases, is expected to strengthen as vaccination proceeds and the pandemic is brought under control, and as confidence, consumption, and trade gradually improve.
1. Recovery has moderated amid a resurgence of COVID-19
COVID-19 has continued to spread around the world. Some areas have experienced a sharp resurgence of infections, and daily new cases remain high. As a result, an incipient recovery in global economic activity has moderated. That said, there has been substantial progress in the development of effective vaccines.
2. A range of growth scenarios in 2021
The 2020 global recession was somewhat less pronounced than previously expected due to shallower contractions in advanced economies and a more robust recovery in China; in contrast, most other EMDEs experienced deeper recessions. Prospects for the global economy are uncertain, and several growth outcomes are possible.