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Economy & Politics
Global economy to grow to 5.2% in 2021 – Cordros Capital
Sub-Saharan Africa’s (SSA) economy is expected to achieve a year-on-year growth of 3.1% by the end of 2021, from -3.0% recorded in 2020.
The global economy is expected to rebound to 5.2% in 2021 as against 4.4% in 2020, according to the presentations by Cordros Capital at its e-press conference titled “Positioning in the New Normal”.
According to Cordros Capital, this feat can only be achieved on the strength of sustained supportive monetary policies, varying degrees of fiscal stimulus, and availability and adoption of virus vaccines in several countries in the world.
READ: Nigeria’s economy to grow by 1.1% in 2021 – World Bank
Key highlights and projections for 2021
- The advanced economies with a year-on-year growth of 3.9% are expected to get further strengthened in 2021.
- The US and the Euro area will grow year-on-year by 3.1% (2020: -4.3%) and 5.2% (2020:-8.3%) respectively, as the countries implement robust fiscal and monetary stimulus packages that would galvanize the economy and hasten the recovery process.
- The emerging and developing economies will print a year-on-year growth of 6.0% predicated on the growth prospects in China’s economy.
- Sub-Saharan Africa’s (SSA) economy is expected to achieve a year-on-year growth of 3.1% by the end of 2021, from -3.0% recorded in 2020.
- In 2021, the SSA regional heavyweights like Nigeria and South Africa would grow year-on-year growth rates of 1.7% (-3.4%: 2020) and 3.0% (-8.0%: 2020) respectively, albeit below their potentials.
- Ghana’s economy will be strengthened in 2021 as it grows year-on-year by 4.2% as against 0.9% in 2020.
- Angola will record its first growth in two years, though at year-on-year of 3.2% in 2021, from -4.0% recorded in 2020, -0.9% in 2019.
- The growth for economies that are largely dependent on commodity exports and tourism would be challenged and might face weaker recovery.
READ: China to overtake United States as the world’s biggest economy in 2028
What this means
The global economic growth means an increase in real GDP – an increase in the value of national output, income and expenditure.
Essentially the benefit of economic growth is higher living standards – higher real incomes and the ability to devote more resources to areas like health care, education, infrastructural developments, etc.
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Business
IMF lifts 2021 global GDP growth to 6%
The group also warned that economic recoveries are diverging dangerously across and within countries.
The International Monetary Fund has lifted its global growth outlook to 6% in 2021 (0.5% point upgrade) and 4.4% in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3% in 2020 due to the effects of the COVID-19 pandemic. This disclosure was made on the organisation’s website on Tuesday.
The group also warned that economic recoveries are diverging dangerously across and within countries, as economies with slower vaccine rollout, more limited policy support, and more reliance on tourism do less well.
READ: Corruption erodes the constituency for aid programmes and humanitarian relief – IMF
What the IMF is saying
“The upgrades in global growth for 2021 and 2022 are mainly due to upgrades for advanced economies, particularly to a sizeable upgrade for the United States (1.3 percentage points) that is expected to grow at 6.4 percent this year.
This makes the United States the only large economy projected to surpass the level of GDP it was forecast to have in 2022 in the absence of this pandemic.
China is projected to grow this year at 8.4 percent. While China’s economy had already returned to pre-pandemic GDP in 2020, many other countries are not expected to do so until 2023.”
READ: Nigeria needs structural and monetary policy reforms to unlock potential – IMF
On divergent recoveries
The IMF stated that divergent recovery paths are likely to create wider gaps in living standards across countries compared to pre-pandemic expectations.
“The average annual loss in per capita GDP over 2020–24, relative to pre-pandemic forecasts, is projected to be 5.7 percent in low-income countries and 4.7 percent in emerging markets, while in advanced economies the losses are expected to be smaller at 2.3 percent,” they said.
“Faster progress with vaccinations can uplift the forecast, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade. Multispeed recoveries could pose financial risks if interest rates in the United States rise further in unexpected ways.“
For Africa, IMF forecasts economic growth of 3.4% in 2021 and 4% by 2022, Nigeria is expected to grow by 2.5% in 2021 and 2.3% by 2022, while South Africa is projected to hit growths of 3.1% and 2.0% for the respective years in focus.
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In case you missed it
The International Monetary Fund (IMF) identified some factors that hamper the economic recovery of low-income countries from the devastating impact of the coronavirus pandemic, factors including access to vaccines, limited policy space to respond to the crisis, the lack of means for extra spending, pre-existing vulnerabilities such as high levels of public debt in many low-income countries and sometimes weak, negative, total factor productivity performance in some low-income countries. These factors continue to act as a drag on growth.
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