World economic forecast.
Based on data from Dr. Bill Connolly, FocusEconomics
The global economy will accelerate in 2021, but significant changes will be seen in many parts of the world. The world will benefit from vaccinations, both directly by reducing disease and indirectly by reducing lockdowns and fears. Although it will take much of 2021 and into 2022 for the full benefits of vaccination to be felt, and poorer countries may take even longer, the United States' major trading partners should look strong next year.
The OECD recently reported that “the outlook has improved in recent months, with signs of recovery in merchandise trade and industrial production…”. Global GDP growth is currently predicted to be 5.6% this year…. Global production is expected to reach pre-pandemic levels by mid-2021. ”
The International Monetary Fund predicts similar growth.
Skepticism about political groups' statements is understandable, but consider the consensus forecasts collected by FocusEconomics. They survey economists on the ground around the world, average the forecasts for each country, and add them together to arrive at a global average. (We also provide regional averages for those interested in South America, for example.) The latest roundup predicts global economic growth of 5.2% in 2021 and 4.1% next year. Forecasters at the company expect the strongest quarterly growth to occur in the second quarter of this year.
The number of coronavirus infections and deaths are declining rapidly around the world, as well as in the United States. The decline in this last surge started well before vaccination, so it was probably a response to high case numbers (further voluntary precautions and government lockdowns) plus the distance from the Christmas holidays. It will be done.
The United Kingdom and the United States have administered the most vaccinations relative to their population. China's vaccination rate is low, but the number of new infections is so low that there is no need to worry as much as one might think. China's data is not completely reliable, but the country is in good shape, even with significant misinformation.
Europe has struggled with vaccinations, with less foresight than the US's Operation Warp Speed, which paid for vaccines from multiple companies before they were tested, even if only one worked. It was meant to be a success. You don't need perfect foresight. All you need is a willingness to risk looking stupid. Perhaps the rise in entrepreneurship in the US and UK accounts for this difference. Nevertheless, excellent vaccines are being developed and produced. Europe will eventually have most of its citizens beaten and its economy will prosper.
Oil prices, 2018-2021.
Based on data from Dr. Bill Connally, Energy Information Administration
Broad expectations for a global economic recovery are reflected in commodity prices. In general, metals and oil can experience changes in demand much faster than changes in supply. Therefore, when demand spikes, prices rise rapidly. However, demand can be current usage or inventory to meet future demand. Oil prices are soaring due to expectations for future consumption expansion. Production restrictions by Russia and OPEC have provided additional stimulus to oil, but such restrictions are typically temporary.
Prices of other industrial products also rose. “Dr. Copper'' seems to have a Ph.D. Because it predicts future production of both consumer and industrial goods. Copper prices are currently within striking distance of a 60-year high.
Maritime shipping has surged, causing delays for ships trying to unload containers in Los Angeles/Long Beach, Oakland and Savannah. Shipping costs have quadrupled compared to a year ago. However, some of the shipping delays are due to social distancing among port workers, which is not a sign of economic strength.
Another sign of improving global economic conditions is that interest rates are rising around the world, although not as much as in the United States. Global demand for credit tends to increase with economic growth more than the global supply of savings. Therefore, when the economy is doing well or is expected to do well in the near future, interest rates tend to rise.
Although the details are hazy, the entire planet has shared the same roller coaster of economic recession and subsequent partial recovery caused by the coronavirus. We will all emerge from the recession over the next 12 months or so, although the timing and magnitude will vary.
