China, which contained the virus outbreak more quickly than the United States and other countries, will continue to benefit from the 7.8% growth forecast for this year. The government poured money into infrastructure projects and extended loans and tax breaks to support companies and prevent pandemic-related layoffs. India’s economy is expected to grow 12.6 percent after a 7.4 percent drop in 2020, the organization added.
Still, the length of a global recovery will depend on the race between vaccines and emerging variants of the virus, the organization added.
If vaccination programs are not implemented quickly enough to reduce infection rates, or if new variants spread and demand changes in vaccines, consumer spending and business confidence will be affected.
The acceleration of vaccination programs would allow the world to “stay ahead of the virus this year and, by the end of 2021, the level of global activity would return to where we thought it was before the pandemic,” said Boone.
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But if the global distribution of the vaccine is erratic, confidence will be affected and companies and consumers will save government aid money, rather than spending it.
This is especially the case in Europe, Germany and France in particular, where a mix of poor public health management and slow vaccination programs is weighing on the recovery, despite billions in government support.
These expenditures “will not be fully effective until the economy is reopened,” said Boone.
The euro area economy, made up of the 19 countries that use the currency, is expected to grow 3.9 percent this year, slightly more than forecast in December, but slower than the United States. In Britain, which accelerated the implementation of national vaccination at the end of last year, the economy is expected to grow 5.1 percent, up from 4.2 percent forecast.