World Outlook

Updated: August 11, 2021

U.S. and China Shoulder the Burden of Global Recovery  

The world economy has slowly turned the corner this year. Its strong recovery is linked to the massive fiscal and monetary stimulus that was implemented in every region of the world, plus the rollout of vaccines that has resulted in a sharp pullback on restrictions of activity.

While China’s success at containing the virus last year enabled the Asia-Pacific region to attain pre-pandemic levels of activity in the final quarter of 2020, the massive fiscal and monetary stimulus in the United States economy will enable the entire global economy to rise above pre-pandemic levels over the summer months.

However, this important milestone does not reflect the pandemic’s damage to world labour markets as some jobs in the services sector may never come back.

Contents of the Summer 2021 edition include:

  • Republicans critical of Democrats’ spending plans
  • Strength of recovery leading to shortages of some goods
  • Massive fiscal deficits here to stay
  • Global inflation on the rise
  • Latin America continues to be a drag on global growth
  • Asia-Pacific still number one
  • European economy on the mend but challenges remain
  • Africa’s complicated rebound
Pumpjack; masked woman in front of airline arrivals sign; mask and sanitizer on a desk

Key findings

The world economy will expand by 5.8 per cent in 2021 and 4.3 per cent in 2022.

The rebound in global economic activity will be led by the Asia-Pacific region, which is benefiting from the strong recovery in the Chinese economy and rising trade volumes as the severity of the pandemic slowly starts to fade.

Latin America will continue to struggle due to the weak rollout of vaccinations and poor leadership in countries like Mexico and Brazil, which have consistently downplayed the effect of COVID-19. Argentina and Venezuela were in trouble before the onset of the pandemic, and their struggles have continued.

The United Kingdom, to counteract the negative impact on export demand attributable to Brexit, is attempting to sign free trade agreements with other countries. A free trade deal with Australia was signed in June 2021.

Africa has done slightly better than most parts of the world at controlling the spread of the virus, possibly because of three factors: African countries’ experience at handling other infectious diseases like malaria; its relatively young population; and limited infrastructure, which therefore decreases contacts between people on the continent.

Previous release

Vaccines to the Rescue: Two-Year World Outlook

Impact paper  |  24-min read
May 13, 2021