The rating agency Fitch expects the world economy to decline 3.7% this year, pointing to a 5.3% recovery in 2021, according to yesterday’s outlook.
According to Fitch, the vaccine for covid-19 “provides the path to recovery”, increasing “the prospect of a significant descent from the global health crisis in the middle of 2021 and a safer economic recovery thereafter”.
“The recovery of economic activity in the third quarter of 2020 after the confinements was much faster than anticipated” in the 20 economies analyzed by Fitch, “particularly in Europe”, something that was not followed up in the fourth quarter.
In addition to revising the outlook for the world Gross Domestic Product (GDP) for 2020 (from -4.4% to -3.3%) and 2021 (5.2% to 5.3%), Fitch is now “significantly more optimistic” for 2022, pointing to growth of 4.0%.
For 2021, “the strong growth expected in the United States and China will be largely offset by weaker growth in Europe,” anticipates the financial rating agency.
As for 2022, the upward revision “implies a significantly faster recovery from the storm compared to the one that followed the global financial crisis”, noting Fitch, however, that the world GDP will still be “2.5% below the level implied pre-virus predictions. ”
For the eurozone, Fitch points to a 7.6% drop in GDP in 2020 and a 4.7% and 4.4% growth in 2021 and 2022, respectively.
China, on the other hand, “shows that containing the virus is the key”, given that China’s GDP “is now 3% above the pre-virus value and is growing rapidly, helped by easing balance sheets and an increase in credit growth” .
According to Fitch, “the distribution of vaccines is key” to lower economic risks, namely “repeated constraints of breaking trends, constant pressure on health systems and extensive voluntary social distance”.
Fitch also estimates that the 2020 recession will be 3.5% in the United States, 5.3% in Japan and 11.2% in the United Kingdom, pointing to 2.3% economic growth in China.
