Global economic growth is set to accelerate this fiscal, driven by a rebound in advanced economies (AEs)
The European Central Bank (ECB) adopted a new symmetric 2% inflation target over the medium term
International non-energy commodity prices declined on-month
The global economy is set to rebound in 2021. Several international organizations such as the World Bank and the International Monetary Fund have revised up their growth forecasts. However, this growth will largely be driven by AEs, particularly the United States (US), owing to strong fiscal and monetary support and high vaccination coverage, giving governments the confidence to reopen. Emerging economies (EEs), on the other hand, continue to face highly inequitable vaccine access and a partial withdrawal of macroeconomic support, offsetting some of the benefits of strengthening external demand (World Bank, June 2021). The unequal access reflects constraints on both demand and supply sides – vaccine hesitancy and vaccine supply, respectively (S&P Global, June 2021). Although parts of Europe and East Asia are seeing a resurgence in cases due to the emergence of variants, wider vaccination coverage provides comfort to AEs.
So, while global growth is set to accelerate at the fastest post-recession pace in 80 years, the divergent paths mean that the recovery in EEs will not be adequate to reverse the pandemic’s impact (World Bank).
