The recovery is now over; a new global economic expansion has begun. The new economic cycle has seen stock market leadership pass from the U.S. to Europe.
A risk to the expansion is the prevalence of COVID-19 variants and the presence of antibodies waning over time which may mean yet another wave of infections in the late fall/winter.
A potential positive is that signs signal a deceleration in some of the upsurge in price pressures in the second half of the year which may lessen market worries over the pace of the rebound in inflation.
In the first half of 2021, the world economy seems to have rebounded back above its pre-pandemic peak, transitioning from the recovery phase to the start of a new economic expansion. Some countries, businesses and families have not fully recovered from the pandemic-led recession. Yet, overall, global GDP fully recovered by the end of the first quarter and continued economic expansion in the second quarter of 2021 will likely lift output above its pre-pandemic high. This pattern marks the sharpest economic “V” in history, with its deep recession and rapid recovery both contained within just five quarters.
And we’re back
Global Q1 estimate based on official reports for many countries.
Source: Charles Schwab, World Bank data as of 5/27/2021.
The global growth forecast of 6.0% for 2021 by the International Monetary Fund (IMF) is supported by the global vaccine rollout, expanded fiscal stimulus, business adaptations to the pandemic and the anticipation of a demand snapback as restrictions are eased. If this forecast is realized, it would be the fastest pace of growth for the global economy seen in nearly 50 years, as you can see in the chart below.