Español, Français, 日本語, Русский
The global economic recovery continues, but with a widening gap between Advanced Economies and many emerging markets and developing economies. Our latest global growth forecast of 6 percent for 2021 is unchanged from the previous outlook, but the composition has changed.
The recovery is not assured until the pandemic is beaten back globally.
Growth prospects for advanced economies this year have improved by 0.5 percentage point, but this is offset exactly by a downward revision for emerging markets and developing economies driven by a significant downgrade for emerging Asia. For 2022, we project global growth of 4.9 percent, up from our previous forecast of 4.4 percent. But again, underlying this is a sizeable upgrade for advanced economies and a more modest one for emerging market and developing economies.
These revisions reflect an important extent difference in pandemic developments as the delta variant takes over. Close to 40 percent of the population in advanced economies has been fully vaccinated, compared with 11 percent in emerging market economies, and a tiny fraction in low-income developing countries. Faster-than-expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of COVID-19 cases in some countries, notably India, have led to downgrades.
Divergences in policy support are a second source of the deepening divide. We are seeing continued sizable fiscal support in advanced economies with $4.6 trillion of announced pandemic-related measures available in 2021 and beyond. The upward global growth revision for 2022 largely reflects anticipated additional fiscal support in the United States and from the Next Generation European Union funds.
On the other hand, in emerging markets and developing economies most measures expired in 2020 and they are looking to rebuild fiscal buffers. Some emerging markets like Brazil, Hungary, Mexico, Russia, and Turkey, have also begun raising monetary policy rates to head off upward price pressures. Commodity exporters have benefited from higher-than-anticipated commodity prices.
Inflation concerns
Aftershocks from the upheaval of last year pose unique policy challenges. Pent-up demand and supply chain bottlenecks are putting upward pressure on prices. Nonetheless, in most advanced economies inflation is expected to subside to pre-pandemic ranges in 2022 for the following reasons:
