London, June 10 (HNA) – The global real GDP growth in 2021 is now expected to be the fastest in more than 40 years, at 5.8 percent (a 0.5 percentage point upgrade relative to the Q1 forecast), followed by 4.5 percent growth in 2022 (a 0.4 percentage point forecast upgrade), according to the Global Economic Forecasts report, released by the Euromonitor.
The forecast upgrade is mainly driven by advanced economies, which are now expected to grow by 5 percent in 2021 (a 1 percentage point increase relative to the Q1 forecast) and by almost 4 percent in 2022 (a 0.7 percentage points forecast upgrade), compared to the long-term trend growth of 1.5 percent.
In contrast, developing economies’ real GDP growth rate forecast for 2021–2022 has been raised by just 0.2–0.3 percentage points to 6.5 percent and 5.0 percent, compared to the long-term trend of 4.1 percent.
Vaccination rates sufficient for approaching herd immunity are likely to be reached in advanced economies and some developing economies in Q3–Q4 2021. Once mass vaccination is attained, a strong recovery is expected in currently depressed high social contact sectors, supported by rising consumer confidence, fiscal stimulus and high accumulated savings.
In contrast, most developing economies are unlikely to reach high vaccination rates before the second half of 2022, delaying their recovery.
Both pessimistic and optimistic scenarios are becoming less likely as more extensive vaccination campaigns are undertaken in Q2–Q3. The baseline forecast is now assigned around 66 percent probability, with pessimistic scenarios of a delayed economic recovery assigned around 28 percent probability and the optimistic scenario of a faster recovery assigned around 6 percent probability.
The main downside risks remain the emergence of more contagious coronavirus variants, and the possible spread of variants that are more resistant to the current vaccines. The risk of a vaccine-resistant virus mutation coming from developing economies with ongoing strong pandemic waves and slow vaccination campaigns, such as Brazil or India, is especially concerning.