Economic Environment 20211

We expect the global economy to gradually recover in 2021 after the sharp downturn resulting from the coronavirus pandemic. Gross domestic product (GDP) will return to roughly the pre-crisis level. We assume that global GDP will grow by 4.3% (2020: –3.7%). Consumers and companies in many countries remain restricted in their freedom of actions for the time being due to measures to combat the pandemic. Positive seasonal impulses should start to make themselves felt as the year progresses. We expect that growing immunization of the population – especially risk groups – will increasingly support the economic recovery in the second half of 2021. Regional differences will presumably remain significant: While we assume emerging markets in Asia will experience robust growth, momentum in Europe, the United States and Japan is likely to initially remain sluggish. Uncertainty about future developments is exceptionally high. It is very difficult to predict how the coronavirus pandemic will progress. Furthermore, the aftereffects of the sharp economic decline in the business sector and the labor market from the past year will materialize further.

Trends in the global economy in 2021

  • Moderate growth expected in Europe and the United States
  • Strong growth likely in Asia

We anticipate an overall moderate GDP growth rate of 3.0% (2020: –6.4%) in the European Union (E.U.). We expect base effects to support growth momentum in countries that were hit especially hard by the pandemic. These include southern European countries with a high percentage of tourism, but also economies in northwestern and eastern Europe where industry is specialized in investment goods and automotive production. It is likely, though, that measures, to contain the coronavirus pandemic, which vary in degree among the different E.U. member countries, will continue to have a significant impact on economic growth. Furthermore, we expect Brexit to have a negative effect on economic growth in the E.U. In the United Kingdom, we are forecasting weak GDP growth of 2.4% due to Brexit and extremely high infection rates at the beginning of the year, after the considerable decline in the previous year (2020: –9.9%).

We expect a GDP growth rate of 4.0% in the United States. A further government spending plan is likely to significantly bolster the economy. However, since the 2020 economic decline in the United States was only about half of what the E.U. saw, base effects should have a smaller impact. Private consumption in 2020 was significantly supported by government payments. Consequently, no strong catch-up effects can be expected in the consumption of goods in 2021. Moreover, we expect the labor market to recover more slowly than in the previous year. While the weaker U.S. dollar should have a positive effect on exports, import prices will foreseeably rise year on year. We do not expect tariffs imposed on imported intermediate or consumer goods from China to drop for the time being, and thus no favorable effect on import prices is foreseeable.

The emerging markets of Asia will presumably see considerably higher growth rates. In China, private consumption will increasingly bolster growth. Global economic recovery should also have a stimulating effect on exports. Overall, growth is likely to slow during the course of the year. Year on year, growth will still be relatively high, at over 7%, and thus above average for recent years. We expect India to see a continuation of the dynamic recovery that began in the second half of 2020. In the other Asian emerging markets, we anticipate a growth rate comparable to the long-year average before the crisis, slightly above 4%.

In Japan, we expect moderate GDP growth of just slightly above 2%. Although this country has been able to control the pandemic better than other advanced economies so far, domestic demand for consumer and investment goods will presumably only recover slowly after the sharp decline in the previous year. Exports are likely to see a considerably better upswing, especially due to increasing demand from China.

Growth prospects in South America will probably remain subdued. We are forecasting total GDP growth in this region of slightly above 4%. Fiscal impetus in Brazil is likely to weaken over the course of the year and dampen further economic recovery (2021: +3.5%; 2020: –4.6%). Macroeconomic imbalances, primarily rising inflation rates coupled with continued low interest rates and growing national debt, will presumably continue to burden the Brazilian currency. In Argentina, too, the debt and currency crisis are expected to dampen the country’s economic recovery following the sharp decline in the previous year (2021: +5.0%; 2020: –10.4%). In the other countries of South America, we anticipate moderate growth in domestic demand and a favorable impact on demand for industrial and agricultural raw materials from the recovering global economy.

1 Our assumptions account for current estimates by external institutions, including economic research institutes, banks, multinational organizations and consulting firms.

Outlook for gross domestic product 2021

Real change compared with previous year

Outlook for gross domestic product 2021 (Real change compared with previous year) (bar chart)
Trends in gross domestic product 2021–2023

Average annual real change

Trends in gross domestic product 2021–2023 (Average annual real change) (bar chart)