By John J. MetzlerEconomic growth is making a long-awaited rebound after the height of the global pandemic; yet the recovery is still shadowed by serious and ongoing concerns overactive Corona virus outbreaks and the danger of flareups on the international scene.
Thus while “the global growth outlook has improved, led by a robust rebound in China and the United States, surging COVID-19 infections and inadequate vaccination progress in many countries threaten a broad-based recovery of the world economy,” advises a current UN report.
The UN’s <em>World Economic Situation and Prospects</em> midterm-2021 report details the long road back to recovery from last year’s contraction of 3.6 percent to a projected 5.4 percent growth for 2021. Amid widespread vaccinations and monetary support measures, the world’s largest economies the United States and China are “on the path to recovery.”
The United States economy is projected to grow by 6.2 percent in 2021. The Report adds, “Buoyed by a strong recovery in exports and robust domestic demand, China is expected to grow by 8.2 percent in 2021.”
The outlook is, however, less optimistic for Europe, still struggling to contain the second wave of the pandemic, which is projected to grow by 4 percent in 2021.
Nonetheless economic recovery in large regions of the world such as South Asia, including India, sub-Saharan Africa, including South Africa, and Latin American including Argentina and Brazil, “remains fragile and uncertain,” the report adds.
For example, India’s second surge of Covid this year has been devastating and far from being resolved. Japan, on the eve of the already postponed <em>Tokyo</em> <em>Summer Olympics,</em> faces an unexpected surge too.
“Vaccine inequity between countries and regions is using a significant risk to the already uneven and fragile global recovery,” asserts UN Chief Economist Elliot Harris. He added, “Timely and universal access to COVID-19 vaccinations will mean the difference between ending the pandemic promptly and placing the world economy on a trajectory of a resilient recovery, or losing many more years of growth, development and opportunities.”
Moreover, the pandemic has caused massive unemployment around the world with at least 114 million people losing their jobs. Equally the UN estimates that 58 million women and girls have been pushed into extreme poverty, dealing a huge blow to poverty reduction efforts worldwide.
The Report stresses, “Timely and universal access to COVID-19 vaccines will remain critical for ensuring broad-based and inclusive recovery of the world economy.” While over a billion vaccine doses have been given globally, the USA, the United Kingdom and China account for about half the doses administered. Equally, countries like Hungary, Israel and Chile have very high vaccination rates leading towards economic reopening.
On the other hand, only 1 out of 10 people worldwide have received a vaccine shot so far, the UN warns.
Thus, a lag in tourism and travel destination reopening is expected given the slow vaccinations internationally.
The report underscores concern for what it calls a “Baby Bust” a shortfall in newborn children in a number of countries. Citing “Vital statistics from France, Italy and Japan show abrupt, even double-digit, declines in birth rates at the end of 2020 and early 2021.”
Yet the outlook in key regions is far from rosy. The Report states, “Europe remains in the grip of the COVID-19 pandemic. The region is forecast to grow by 4.1 percent this year… A number of countries in Europe are experiencing a new wave of infections.”
Latin America lags; “After suffering the worst downturn in over a century, Latin America and the Caribbean’s economy is set to gradually recover from the COVID-19 crisis. The region’s GDP is projected to grow by 4.3 percent in 2021.” This follows a slip of 7.3 percent in 2020.
East Asia on the other hand appears poised for success with “growth projected to rebound from 1.0 per cent in 2020 to 7.1 percent in 2021.” Japan is expected to grow 3.3 percent this year. Global demand for electronics and semiconductors will continue to benefit economies such as South Korea, Malaysia, and Taiwan.
Fortunately, global trade is expected to recover from last year’s contraction of 8 percent; Trade in goods and services is projected to expand by 9.4 percent in 2021.
Despite the good news, one looming problem facing economies such as the USA and many European states concerns unsustainable government spending levels and the dangerously high debt incurred to spur economic expansion. Such a cure ultimately may prove as pernicious as the pandemic.
John J. Metzler is a United Nations correspondent covering diplomatic and defense issues. He is the author of Divided Dynamism the Diplomacy of Separated Nations: Germany, Korea, China (2014).
Free Press International
