World Economic Outlook, April 2021: Managing Divergent Recoveries
World Economic Outlook, March 2021
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- World Economic Outlook, April 2021: Managing Divergent Recoveries
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- Published: March 23, 2021
Global outlook and key projections
- Global growth is projected at 6 percent in 2021, moderating to 4.4 percent in 2022.
- Projections for 2021 and 2022 are stronger than in the October 2020 WEO.
- Upward revision drivers:
- Additional fiscal support in a few large economies.
- Anticipated vaccine-powered recovery in the second half of 2021.
- Continued adaptation of economic activity to subdued mobility.
- High uncertainty surrounds the outlook, driven by:
- The path of the pandemic, including new virus mutations.
- Effectiveness of policy support to bridge to vaccine-powered normalization.
- Evolution of financial conditions.
Global prospects, divergence, and risks
- Recoveries are diverging across countries and sectors due to:
- Variation in pandemic-induced disruptions.
- Differences in the extent of policy support.
- The strength of the recovery depends crucially on rapid rollout of effective vaccines worldwide.
- Risks highlighted:
- Accumulating human toll from the pandemic.
- Potential for persistent increases in within-country inequality and divergence in income per capita across economies.
Medium-term damage (scarring) from the COVID-19 recession
- Expected medium-term losses:
- Global output is expected to be about 3 percent lower than pre-pandemic anticipated output for the world in 2024.
- Relative impact by country group:
- Emerging market and developing economies are expected to suffer more scarring than advanced economies.
- Financial instabilities—typically associated with worse scarring—have been largely avoided so far in this crisis.
Labor market fallout and policy responses
- Labor market impacts:
- Young and lower-skilled workers are particularly hard-hit.
- Preexisting trends favoring a shift away from jobs more vulnerable to automation are accelerating.
- Policy implications for labor markets:
- Job-retention support is extremely powerful at reducing scarring and mitigating unequal impacts.
- As the pandemic subsides, shifting toward worker reallocation support measures could:
- Help reduce unemployment more quickly.
- Ease adjustment to the permanent effects of the COVID-19 shock on the labor market.
Monetary policy spillovers and emerging market vulnerabilities
- Early pandemic monetary easing by advanced economies provided much financial relief to emerging markets.
- Multispeed recovery challenges:
- A US tightening resulting from a stronger US economy tends to be benign for most emerging market economies.
- A surprise tightening triggers capital outflows from emerging markets.
- Policy recommendations to reduce vulnerability:
- Advanced economies should clearly explain how they will implement monetary policies during the recovery.
- Emerging market economies can reduce vulnerability by adopting more transparent and rules-based monetary and fiscal frameworks.
Source: World Economic Outlook, April 2021: Managing Divergent Recoveries
Content in this bundle
- Annex 1.SF.1. Food Insecurity and the Business Cycle
- Microsoft Word - April2021_WEO_Chapter2 - Online Annex - FINAL
- DMSDR1S-#7011397-v10-April_2021_WEO_-_Chapter_3_-_Online_Annex
- Microsoft Word - DMSDR1S-#7019343-v12-2021_WEO_Chapter_4_Annex
- Chapter 1
- Chapter 2
- Chapter 3
- Chapter 4
- Dataset overview: table1-apr2021weo
- Dataset overview
- Dataset overview — WEO Chapter 3 Apr. 2021
- Dataset overview
- Executive Summary
- Foreword
- stasapp - Chapter 1 and Statistical Appendix tables and com-
- tablea
- tableb
- Full Report