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Global economy heading for a solid rebound

Global economy heading for a solid rebound

06 Nov 2020

The global economy is forecast to record a solid rebound in 2021, buoyed by robust domestic demand and exports in the advanced economies and the emerging markets and developing economies (EMDEs).

However, the Finance Ministry said that risks to the global economy persist, as growth may be hampered by the re-intensification of trade tensions between the United States and China, uncertainties surrounding the Brexit outcomes and widespread geopolitical tensions.

In its Economic Outlook 2021 report released today, the ministry said the continued low oil prices and deepening climate crisis may also derail the recovery.

“In addition, limited fiscal space and a further spike in government debts may also impede growth,“ it said.

The global economy, however, is envisaged to remain on a positive growth trajectory, with the implementation of fiscal and monetary measures to boost consumer and investor confidence.

The ministry added that the successful development of an effective and accessible COVID-19 vaccine, coupled with the containment of the spread of the pandemic in the near term, may further stimulate global growth.

“While the pandemic poses multifaceted challenges to countries, especially in amplifying existing socioeconomic gaps, the COVID-19 pandemic also presents opportunities for economies to institute reforms, towards accelerating digitalisation and pursuing sustainable growth,“ it said.

According to the report, the global economy is projected to contract by 4.4 per cent this year compared to 2.8 per cent growth in 2019, due to unfavourable performance in both advanced economies and the EMDEs, mainly resulting from the adverse impact of the pandemic.

However, it said, robust growth in the advanced economies and the EMDEs is expected to spearhead global growth by 5.2 per cent in 2021.

“In 2021, the advanced economies are forecast to rebound by 3.9 per cent, spurred by improved domestic demand and increased trade activities. Growth in the US is expected to improve by 3.1 per cent, backed by a recovery in private consumption and favourable investment,“ it said.

Meanwhile, the Gross Domestic Product (GDP) of the EMDEs in 2021 is expected to bounce back by 6.0 per cent, buoyed by solid domestic demand and higher export, the report said.

“China is envisaged to lead the recovery in the region, with a sturdy growth of 8.2 per cent. Likewise, the economy of India is projected to rebound by 8.8 per cent on the back of strong consumer demand,“ it said.

The GDP of ASEAN-5 (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) is anticipated to turn around by 6.2 per cent, on account of robust domestic consumption, higher investment and a favourable trade environment.

Source: The Sun Daily