RWI Konjunkturberichte

Although economic activity increased significantly in the second half of 2020 after the deep slump, the development of the global economy will continue to be shaped by the coronavirus pandemic in the spring of 2021. Rising infection figures and the associated tightening of containment measures continue to weigh in on activity in many places, especially in the service sector. Manufacturing, on the other hand, is showing a strong recovery. At the end of the year, both global industrial production and trade in goods have already exceeded the pre-crisis level. The strong development of the Chinese economy played a particularly important role in this. At the same time, industry in the other countries is less affected by the containment measures than during the first phase of the pandemic. Globally, the development in the different regions is heterogeneous. While China was the only major economy to record positive economic growth in 2020, GDP elsewhere is still significantly below the pre-crisis level. Important differences are also emerging for the current year. While the Chinese economy is likely to continue to expand strongly and while robust growth is also on the horizon for the USA, development in Europe should be noticeably burdened by the sharp increase in the number of infections during the winter, which again resulted in extensive containment measures. Overall, a world GDP growth of 6.0% is expected for 2021. As the recovery progresses, growth is likely to normalise in the coming year, yet it should nevertheless reach 3.9%. Not least, higher energy prices will contribute to the fact that inflation rates over the forecast period are likely to be somewhat higher than in the previous year. The development of the pandemic continues to pose a considerable risk to economic development. If it is not possible to reduce the risks of infection, especially through vaccination, the economic recovery in some service sectors is expected to be significantly delayed. At the same time, sharp increases in infections carry the risk of renewed tighter restrictions and restraint on the part of economic actors. The longer the pandemic lasts, the greater the burden on businesses and the greater the risk of bankruptcies and business failures. At the same time, it is likely to become more difficult for some states to sustain their expansionary fiscal policy.

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