There are several “bright spots” in the global economy as vaccine programmes are rolled out, notes Atradius
The global economy is forecast to recover almost fully from the pandemic-driven recession but there are major divergences in the pace of recovery across the world, according to Atradius.
Emerging Asian countries, led by China and India, will recover much more strongly than the rest of the world. By comparison, Europe and South America will lag behind; only reaching 2019 GDP levels again somewhere deep in 2022. The US and Eastern Europe keep the middle ground, restoring GDP levels before 2021 year end.
There are several “bright spots” in the global economy. First and foremost is the quick development of Covid-19 vaccines, albeit disparate speeds of mass vaccination rollout across the globe.
A second was created by the election of Joe Biden as US President, reducing policy uncertainty which dominated the Trump tenure, particularly surrounding international trade.
Meanwhile, the EU approved its Budget for funding up until 2027 and, following a protracted period of negotiations, the EU and UK struck a Brexit deal – avoiding a potentially damaging no-deal scenario.
However, forecasts for recovery are highly dependent on how quickly people can be vaccinated and lockdowns ended with business support remaining essential to support economies.
Looking forward, Atradius forecasts the global economy will grow by 5% in 2021. This means that by the end of the year the economic impact of the crisis on a global level will be wiped out; returning GDP to its 2019 pre-pandemic level.
Simon Rockett, Head of UK Risk Underwriting at Atradius, commented: “The 2020 recession has been unique in that GDP and trade have been severely impacted but insolvencies remained low due to the fiscal stimulus and temporary freezing of bankruptcy proceedings in many markets. This however could change dramatically as stimulus is phased out. In the interim, business support remains essential to support both individual firms and wider economies. Cautious credit management including attention to the financial stability of your business and that of your buyers remain paramount.”