File photo of Moody's sign is displayed on 7 World Trade Center, the company's corporate headquarters in New York (Photo: AP)
Emerging market’s real GDP to grow by 13.9 percent in 2021 and by 5.% in 2022, following a 7.2 percent contraction in 2020, while their economies economy will be only be 5.6 percent larger in the fourth quarter of 2021 relative to the fourth quarter of 2020, according to a recent report published by Moody’s on the occasion of the anticipated G-20 meeting.
Moody’s also expected emerging markets economies to accelerate on a sequential basis only in 2022.
Globally, recovery from the COVID-19 crisis will remain uneven, with the pandemic affecting individual businesses, sectors and regions very differently, according to the report.
The report said that goods demand has almost fully recovered globally, while the recovery in services continues to struggle.
Transportation, hospitality, and leisure and arts are sectors the report expected to continue to suffer, yet the information technology, consumer goods, pharmaceuticals and financial sectors have thrived already.
It added that many individuals around the world have lost their jobs and continue to face employment uncertainty, but on the other hand, the sharp decline in household consumption and the rise in asset prices have reinforced household financial balances at an aggregate level.
“Governments in advanced economies have been able to support households and businesses far more substantially than have emerging market and less-developed countries”, said the report.
Concerning vaccines against the virus, the report expected the new developments, including from Johnson & Johnson (Aaa negative) and Novavax Incorporated, to be brought into use in the first half of 2021, while antiviral drugs and other COVID-19 treatments also might continue to improve, aiding in pandemic management.
Moreover, production of approved vaccines from BioNtech-Pfizer, Moderna and Oxford University-AstraZeneca is being scaled up, which will help mitigate current shortages in advanced economies over the coming months, according to the report.
In emerging market economies, the report said that the Oxford University-AstraZeneca vaccine is being rolled out widely in emerging market countries, while the low-income countries will depend on the multilateral COVAX facility for vaccine doses.
“Nevertheless, lack of cooperation between advanced and emerging countries means that less-developed countries that do not have enough assured supplies of effective vaccines or the capacity to produce them will struggle to overcome the pandemic. And even in countries that successfully curb the spread of the virus, vigilance will continue to be paramount”, according to the report.
According to Moody’s baseline economic forecast, the world will continue to battle COVID-19 and its variants over the course of 2021 and 2022, and the virus will be tamed only gradually with vaccinations and treatments, which means a gradual recovery of economic activity in most countries.
The Biden administration’s efforts to increase the pace of vaccinations, if effective in reducing the severity of the health crisis, will accelerate the recovery in services, the report expected.
The report revised down the G-20 economic growth contraction in 2020 to 3.3 percent, down from 3.8 percent previously projected, driven by a better-than-expected recovery across a wide range of advanced and emerging market economies in the second half of 2020.
It also projected the G-20 countries to grow by 5.3 percent in 2021 and by 4.5 percent in 2022, up from Moody’s prior forecasts of 4.9 percent and 3.8 percent, respectively.