The global economy is expected to expand by 4% in 2021. That GDP growth is exciting news, especially after the 2020 losses, but it isn’t a guaranteed forecast.
Economists say that the 4% GDP estimate is based on the assumption that COVID-19 vaccines become widespread throughout the year. There must continue to be a positive immune response in people, despite potential variants, for economic activity.
The only reason why 2020 wasn’t worse is that China was able to recover faster than expected, while the advanced economies had a shallower contraction than anticipated. Those actions still resulted in a 3.5% loss.
The United States Will Have a Below Average Recovery
The World Bank expects the United States to fall short of the global recovery forecast, although not by much.
As the world reaches 4% GDP growth with a COVID-19 vaccine, the U.S. is expected to see a 3.5% surge in 2021. If China gets excluded from the economic numbers, Americans would be slightly above the global average.
Japan and Europe, which saw even more of a contraction in their economies than Americans, will have similar growth struggles in 2021. Europe is expected to grow at the same rate as the United States, while the Japanese might reach 2.5% for the year.
If infections continue to rise and complications in the vaccine rollout occur, the growth estimates could be slashed by almost 70%.
Economists don’t see two consecutive years of GDP loss, but global expansion could be limited to approximately 1.5%.
On the other end of the equation, a faster-than-anticipated vaccine rollout could help the world recover 20% faster.
Although COVID-19 is creating debt risks and other significant problems in emerging economies, it is also providing new opportunities to explore business opportunities. If a vaccine can be successfully administered to most people, we should see a return to normalcy by 2022.