Global Economic Projections 2021/ 2022

Global Economic Projections 2021/ 2022

 The global economy is growing more than was expected a year ago though recovery is inconsistent. According to a recent Organisation for Economic Co-operation and Development (OECD) Interim Economic Outlook report, advanced and emerging markets remain exposed to risks.

As countries emerge from the COVID-19 crisis with respective and varying challenges, they have had to consider their pre-pandemic strengths and weaknesses and their governance responses during the pandemic. Where output or employment has recovered to pre-pandemic status, recovery is incomplete – jobs and incomes still fail to meet the standards set before the pandemic. The OECD also states that governments and central banks' support helped circumvent a perceptional "worst" in the outbreak.

The current worldwide vaccine roll-out and gradual resumption of economic activity have indicated a strong global growth of 5.7% in 2021 and 4.5% in 2022. As of July this year, the International Monetary Fund (IMF) revealed its maintained 6% global growth forecast for 2021 but upgraded its outlook for the United States (U.S.) and other wealthy economies, and downgraded its expectations for developing countries that have so far struggled with increased COVID-19 infections. For 2022, the IMF has maintained its global growth projection of 4.9%. Beyond that year, it forecasts an average global growth of 3.3% in the medium term.

The IMF expressed particular concern about the vastly varied paces of recovery in advanced and emerging economies. It anticipates that while economies can exceed their pre-pandemic status by 2024, developing countries (excluding China) could remain 5.5% below their pre-pandemic forecast.

Like elsewhere worldwide, Africa imposed restrictions on movement at the beginning of 2020 to limit the spread of COVID-19, stifling trade and other vital economic activities like tourism and transport. The World Bank reported that the economies of Angola, Nigeria and South Africa were expected to emerge from recession in 2021:

·       Oil production in Angola witnessed a 0.4% growth in 2021.

·       Nigeria’s growth is projected at 2.4%, fueled by services.

·       South Africa – the continent's most industrialised economy, was expected to grow by 4.6% due to services, industry, and agriculture.

Furthermore, the World Bank mentioned non-resource-rich countries would make a strong comeback, with Ivory Coast and Kenya expected to grow 6.2% and 5%, respectively.

The economy of Sub-Saharan Africa is expected to grow by 3.3% in 2021 and 3.5% in 2022 due to increasing commodity prices, the lifting of COVID-19 restrictions and resumption in global trade. More recently, the Economist Intelligence Unit (EIU) reported that the South African economy is the only one of the G20 group of countries that will not achieve pre-pandemic levels of growth before 2022.

A division of The Economist Group, the EIU’s latest forecast indicates forecasts consistent with those made by the IMF but projects that the South African economy is expected to grow 4.2%. Economists mention that the unrest in the country in July of this year negatively impacted its third-quarter Growth Domestic Product (GDP). Global forecasting director at the EIU, Agathe Demarais, highlighted the following:

·       South Africa is among the slower-recovering G20 countries, straggling behind Argentina, Mexico and Japan.

·       The fast-recovering states include China (8% growth), the U.S. (6% growth), Russia (3.8% growth) and India (8.2% growth).

The global outlook remains vulnerable – likely to face significant downside risks such as additional COVID-19 waves and variants and financial stress amid high debt levels. Countries will need to balance the need to support recovery while protecting financial stability.

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