The global economy will see real GDP rebound next year to reach 4.4 percent, up from the 4.2 percent expected in 2020, Fitch Solutions projected.
During its Global Macroeconomic Quarterly Update event, held virtually on Thursday and attended by Ahram Online, the global head of Country Risk at Fitch Solutions, Cedric Chehab, said that emerging markets will be faster in terms of a growth rebound than developed countries, which are expected to see over 5 percent growth in 2021.
GDP growth in MENA will see GDP growth close to 3.5 percent in 2021, according to a Fitch Solutions report.
Chehab said that the second quarter of 2020 was a low point for the global economy and recovery will be patchy, adding that GDP in developed markets hit record lows ranging between -25 percent to near to -40 percent year on year.
GDP in emerging markets also took a huge hit in the same quarter, ranging between -5 percent and close to -25 percent, according to Chehab.
Countries all over the world have since eased lockdown measures, and patterns have slowly begun to normalise, especially in grocery and pharmacy, retail and entertainment, while global trade has started to bounce back as well, according to the report.
Chehab asserted that the global macroeconomic outlook depends on finding an effective vaccine for the COVID-19 virus, adding that Fitch expects that vaccine approval will come in the first half of 2021.
On the outlook of emerging markets, on average, the recovery will be challenging given the failure to contain COVID-19 and limited policy flexibility; the strongest rebounds will be seen in Asia, but Turkey and the UAE will also see reasonably strong rebounds, according to Fitch.
Markets with poor fundamentals, such as Brazil, Mexico and South Africa, will see weak recoveries, Fitch predicted.
The report also identified five key risks to watch that will likely affect the global macroeconomic scene, including the anticipated US elections, market volatility and inflation, deteriorated labour markets, the challenging Brexit deal, a likely second wave of COVID-19 and the flu season.
Fitch Solutions also expects that Joe Biden will win the presidency race, with odds of 70 percent.
Reviewing Fitch Solutions’ sixth edition of the Global Pulse Survey on major economic concerns, Chehab said that 55 percent of respondents indicated that persistently negative economic growth was their biggest economic concern over the next 18 years, while 15 percent were worried about an insufficient fiscal and monetary policy response to COVID-19.
Six percent of respondents were concerned about the continued liquidity shock and volatility.