PwC reveals Global Economic Trends forecast for 2021
PwC has revealed its latest analysis of global trends, and its first of 2021. In a report titled Predictions for 2021: From the Great Lockdown to the Great Rebound , the professional services specialist has identified three themes for this year – record growth, uneven recovery, and a push for green infrastructure.
PwC says it expects the global economy to expand by around 5 per cent in market exchange rates – the fastest recorded in the 21st century. However, this is dependent on a successful deployment and spread of effective COVID-19 vaccines and a continuation of supportive fiscal conditions.
It is not all plain sailing. PwC says the next three to six months will be challenging in particular for Northern Hemisphere countries experiencing winter and further national lockdowns. Output in some advanced economies, could contract in Q1 with growth more likely in the second half of the year – coinciding with expected successful vaccination of large sections of the population.
PwC adds that a rebound will be swift but uneven. By the end of 2021 or early 2022, PwC says it expects the global economy to revert to its pre-pandemic level of output, but with a changed landscape. For example, while the Chinese economy is already bigger compared to its pre-pandemic size, advanced economies which are either service-based (UK, France, Spain) or more focused on exporting capital goods (Germany, Japan) are unlikely to recover to pre-crisis levels by the end of the year.
In these advanced economies, lower output levels are projected to lead to higher unemployment. PwC therefore expect governments’ focus to gradually shift from fighting the virus to dealing with higher unemployment by upskilling their workforce and creating jobs in labour-intensive sectors.
PwC predicts that 2021 will be the year where the US, the EU and China will refocus their efforts to fighting climate change. The US is expected to re-join the Paris Accord while EU member states are expected to accelerate the transition towards a greener economy. Finally, China’s 14th Five-Year Plan is expected to include increasing energy efficiency. The United Nations Climate Change Conference (COP26) will also be held in Glasgow this year and is expected to provide a springboard for many policies and targets.
