In 2020, a 4.4% drop in world GDP is expected, after a slight upward revision with respect to the projections made in the middle of the year, reported the Economic Commission for Latin America and the Caribbean (ECLAC).
This is due, in part, to a better-than-expected second quarter in some of the larger economies, such as China (driven by a strong public investment package), the United States and the euro area, where declines, Although historic, they were also somewhat tempered by the large sets of fiscal measures and by the rebound that led to the reopening of economies during the third quarter.
According to ECLAC, for 2021 world product growth of 5.2% is expected, driven mainly by emerging economies, whose rebound would be above that of developed economies.
The outlook, however, is subject to a high degree of uncertainty, as it depends on the evolution of the pandemic, including the risk that the second wave of infections will intensify and spread to more countries and regions, and the speed at the that vaccines can be distributed.
For the group of developed economies, a drop of 5.8% is expected in 2020, while for 2021 a positive growth rate of 3.9% is expected. This means that, although growth rates will recover in 2021, on average for these economies the recovery would be partial and next year the pre-crisis output levels would not be reached.
In the developed economies group, in the United States the risk of new restrictions increased due to a further increase in cases, and the pandemic may continue to accelerate for a longer time with the flu season. Despite this, the strong third quarter growth is believed to have continued into the fourth quarter, leading to forecast a smaller contraction than before. The country’s economy is expected to fall 4.1% in 2020 and the growth rate to be 3.6% in 2021.
In the euro zone after a respite over the summer and signs of economic recovery on the way, the number of Covid-19 cases began to worsen again in late October, causing many countries, including Germany, France and Italy, they implemented new lockdowns.
This will lead to a drop in GDP in the fourth quarter, but probably at a slower pace than in the first lockdowns. Given the above, this year GDP would fall 8.0%, which is better than the forecast for July (-8.7 percent).
For 2021 the forecast is for a growth of 5.1%. For the group of emerging and developing economies, a fall of 3.3% is expected this year and a growth of 6% in 2021, a rate above that of developed economies.
It should be noted that these rates mainly reflect the positive performance expected for China which, after growing 1.9% this year, would rebound to 8.1% growth in 2021.
Although the 1.9% rate is the lowest in the last four decades, China is the only one of the large emerging economies whose growth is positive this year. Behind this result are the dynamism of the real estate sector, driven by tax expenditures on investment and infrastructure, and the recovery, starting in the second quarter, of the external sector.
While the pandemic spread in the rest of the world, the return to production allowed the country to satisfy the growing external demand for medical devices (including personal protective equipment) and computer equipment, amid a global shift towards work remote.