Summary

Supported by unprecedented government-led stimulus measures and swift improvements in controlling the pandemic in the advanced economies and China, global growth has recovered well. After a healthy recovery in 1H21, global growth momentum has accelerated into 3Q21. Further upside potential may come from additional US fiscal stimulus, ongoing monetary easing and similar support measures in other major economies. At the same time, numerous challenges have become accentuated over the past weeks. With uncertainties in both directions, the global GDP growth forecast remains unchanged for now for both 2021 and 2022 at 5.6% and 4.2%, respectively.

The US economic forecast is unchanged at 6.1% for 2021 and 4.1% for 2022. Euro-zone economic growth remains at 4.7% for 2021 and 3.8% for 2022. The forecast for Japan is also unchanged at 2.8% for 2021 and 2.0% in 2022. China’s economy is seen to grow at 8.5% in 2021 and 6% in 2022, in line with the previous month’s assessment. Meanwhile, India’s 2021 growth forecast has been revised down to 9%, following a weaker-than-expected recovery in 2Q21, although growth for 2022 remains unchanged at 6.8%. Given strong growth in 2Q21, Brazil’s growth forecast for this year has been revised up to 4.7% from 4.2%, while growth in 2022 remains unchanged at 2.5%. Russia’s forecast for 2021 has been revised up to 3.5%, benefitting from OPEC-non-OPEC efforts to stabilize the oil market, while the forecast for 2022 remains unchanged at 2.5%.

The underlying assumptions for world economic growth in 2021 and 2022 are largely unchanged. This includes, in particular, the assumption that COVID-19 will remain well contained in advanced economies in the sense that it will not dampen the recovery beyond current levels and the pandemic will also not pose a large obstacle to major emerging economies. While some softening of the 4Q21 growth dynamic has been reflected in the GPD growth forecast, it remains to be seen whether the recent rise in infections in selective major economies will continue, and whether this finally leads to a material softening in consumption. Another challenge is the ongoing global supply-chain issue. Tight labour markets may lead to rising inflation at the global level. Finally, very high debt levels, in both governments and the private sector, could provide substantial challenges going forward.