AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Source:Song_about_summer, Shutterstock
Summary
- With significant developments around the vaccine and major government policy actions being taken globally, the world economy is expected to grow 5.5%.
- The IMF projections show that the real GDP in the U.S. would grow by 5.1% in 2021 and by 2.5% in 2022.
- The employment sector is expected to show staggering improvement due to potential structural changes in the economy.
Nations across the globe are on the mend as they have begun neutralizing the devastating effects of the pandemic left behind on the economy as well as on financial markets. A spate of rapid developments surrounding the vaccine have given a fillip to the economies worldwide. However, many countries, including the U.S. still have a long way to go.
According to the IMF, the spread of the COVID-19 vaccine should spur the global economic growth by 5.5% in 2021. Such an improvement is long overdue as the global economy shrunk by 3.5% in 2020 due to the pandemic related adversities.
The United States could particularly gain from its government stimulus program provided during late 2020. This government support is crucial for economies to recover and mitigate the damages caused by the pandemic. The combined strength of the policy stimulus and organized vaccine rollout would determine how quickly the country recovers.
US Economy Growth Projections
The IMF projects that the real GDP growth for the US during 2021 would be 5.1%, while in 2022 it would drop to 2.5%. However, recent estimates provided by the US Congressional Budget Office (CBO) are not that bright as they peg the country’s economic growth at 4.6% during 2021.
However, the current CBO projection is an improvement over their previous projection of 4% growth issued in July 2020. The CBO projections saw an improvement, mainly driven by reopening of markets and increased economic activity during the 6 months ending December 2020. The CBO report also estimates the 2020 stimulus package to increase the budget deficit by USD774 billion in FY21 and by USD98 billion in FY22.
The first stage of economic recovery was slower and less intense. However, over the past few months the economy has galloped ahead faster than expected.
Inflation rate is expected to rise from 1.6% in 2021 to 2.1% in 2022, measured according to the Consumer Price Index, excluding food and energy costs.
Meanwhile, not much is expected to change regarding the US-China relations, also there are not many chances of them deteriorating.
Lagging Employment
Unemployment rate is expected to decrease to 5.7% in 2021 from its 2020 rate of 8.1% in 2020. This recovery, however, is not expected to reach the pre-pandemic level of unemployment.
Job recovery may take longer as there is uncertainty surrounding the potential structural changes in the economy. With the facility of working remotely, many people have started shifting away from major cities which has impacted the businesses in these areas.
However, it is still not clear whether the local businesses in areas away from main cities have been able to absorb this influx of migrated consumers.
