The world economy continued to grow at a solid pace in early 2021, after reaching pre-pandemic levels at the end of 2020, the European Central Bank () noted.
Specifically, national accounts data confirm that the world economy (excluding the euro area) fully recovered in the last quarter of 2020 to reach pre-pandemic levels, despite the worsening of the pandemic.
Furthermore, the global composite activity Purchasing Managers Index (PMI) (excluding the euro area) remained above its long-term averages in the first quarter of 2021.
The most recent PMI values also suggest that the reactivation of the world economy has spread to a greater extent, as the dynamism of growth in services outpaced the steady advance of manufacturing.
The Covid-19 pandemic has caused a huge global economic upheaval, leading to severe recessions in many countries.
In the January 2021 World Economic Outlook, the International Monetary Fund (IMF) estimates that despite unprecedented political support, global GDP contracted 3.5% in 2020, one of the deepest global recessions in the world. story.
The most severe economic recessions occurred in India, Western Europe, the Middle East, and Latin America.
By contrast, China was the only major economy that posted economic growth.
The persistence of supply bottlenecks represents a short-term risk for global activity.
As the global economy recovers from the Covid-19 disruption, supplier lead times have lengthened and are currently similar to those seen at the height of the pandemic, last spring, particularly in the advanced economies, although this time they also show an increase in world demand.
In addition, the global PMI for input prices has risen markedly, mainly reflecting the demand-driven rise in commodity prices in early 2021.
According to the ECB, further improvement in global growth prospects and continued policy support sustained optimism in international financial markets, with financial conditions remaining very accommodative.
Following the Governing Council meeting in mid-March 2021, international equity markets rose moderately, spreads on private fixed income securities narrowed and the Cboe Volatility Index (VIX) continued to approach levels recorded before the pandemic as a result of more encouraging global growth prospects.