World Economic Performance Projections for 2020 & 2021

Moody’s Agency released a report on the global economy’s performance for the past and the remaining parts of 2020 and 2021. A gradual recovery is expected during the second half of this year. But the projections theories will be affected by the probable proliferation of the Coronavirus without the return of large-scale closures. Global economic recovery capacity is likely to continue for a long time as the 2nd quarter of 2020 is will be recorded in history as the worst quarter for the global economy since World War II. A gradual recovery is expected to begin in the second half of 2020 but this result will depend on whether governments will be able to reopen their economies simultaneously while maintaining public health. The demand recovery will determine the ability of companies and labor markets to recover from the shock.

The closing impacts on the economic performance of the 2nd quarter are greater than expected and display the extent of both economic and financial turmoil in the first half of 2020. Consequently, Moody’s Agency has revised 2020’s growth forecasts for some countries such as Germany, France, Italy, Canada and Indonesia as they have become relatively stable while countries such as the United Kingdom, Brazil, India, Saudi Arabia, and Argentina whose economic performance was affected negatively.

The (G20) real GDPs (developed and emerging) is expected to contract by -4.6% in 2020 as a whole to be followed by a 5.2% growth in 2021. The G20 advanced economies are expected to contract by -6.4% in 2020 before growing by 4.8% in 2021. Emerging economies will shrink by -1.6% in 2020 and will grow by 5.9% in 2021. Emerging markets, except for China, will contract by -4.7% in 2020 but will grow by 4.3% in 2021.

Differences in scale and composition of policy support among countries will result in uneven recoveries of their economies as they will adopt the type of executed support through financial liquidity measures in their economies. Most financial markets have recovered lately though the turmoil risks are high and financial ones will increase in the event of an unchecked return of disease outbreak which warrants renewal of large-scale closures. Besides, inappropriate or premature removal of policy support poses financial stability risks.

Moody’s Agency report clarified that the Corona crisis intensified trade and technological relations tensions between the United States and China. Deterioration of relationships makes the economic and geopolitical environment extremely unstable for companies both in China and the United States as well as for other countries.