Economy Recovery Move On ? , World Economy Recovery 2021 - The Struggles of Developing Countries

INTERNATIONAL    |       WORLD ECONOMY RECOVERY 2021

The past few months have brought a string of upbeat news on the global economy, suggesting a vigorous recovery from the COVID-19 crisis. World merchandise trade has soared and is already well above the pre-pandemic level (figure 1). Similarly, global industrial production has seen a V-shaped recovery since the middle of last year. The prices of key raw materials, such as copper, iron ore and lumber, reached record levels in the second quarter of 2021. Crude oil prices climbed to a 2-year high above $70 per barrel in June. Meanwhile, capital flows to developing countries have rebounded since late 2020, driven by extraordinarily accommodative monetary conditions, abundant global liquidity, and strong risk appetite among investors.

Against this backdrop, macroeconomic forecasters have raised their global growth projections for 2021 and 2022—often by a significant margin. In the World Economic Situation and Prospects (WESP) as of mid-2021, UN DESA projects world gross product to expand by 5.4 per cent in 2021 and 4.1 per cent in 2022—upward revisions of 0.7 percentage points from the forecasts presented in January. Developed countries are projected to grow by 5 per cent in 2021, a full percentage point faster than previously expected, whereas developing countries’ 2021 growth forecast has been lifted by 0.4 percentage points to 6.1 per cent. According to the World Bank,3 the current global recovery is set to be faster than any of the previous recoveries from a worldwide recession since the end of World War II.