EDB Macroeconomic Forecast: Strong Recovery Growth in 2021
The Eurasian Development Bank (EDB) published its Macroeconomic Forecast with projections for the economic development of its member states for 2021 and the medium term. The review states that, at the beginning of this year, the global economy started to steadily recover. The Global PMI Composite Output Index remains above the 50-point threshold and amounted to 53.2 p.p. in February 2021. The Bank’s analysts note that recovery will be proceeding at an uneven pace, with manufacturing remaining the driver, while services continuing to struggle due to persisting constraints.
The EDB expects the global economy to be growing faster in 2021, as the pandemic recedes amid mass vaccinations, and major world economies preserve their current monetary and fiscal stances. The EDB projects the Eurozone’s GDP to grow by 4.3% in 2021, the U.S.’s by 5.5%, and China’s by 8.5%. The average Urals oil price in 2021 is expected to be around US $55 per barrel, which the Bank’s analysts believe is a comfortable level for the EDB’s region of operations.
The Macroeconomic Forecast notes that the year 2021 will become a period of strong economic recovery for EDB member states. The Bank projects the aggregated GDP growth rate of its member countries at 3.3%, after a 3% decline in 2020. With progress in countering the pandemic, the easing of social distancing measures and favourable external economic conditions will be the key drivers of stronger consumer and investment demand. Most of the region’s economies will recover to pre-crisis levels by the end of 2021 and 2022. The EDB projects that the significant acceleration of inflation in the member states will be temporary, with inflation slowing down to an average of 4.5% year-on-year in the region by the end of 2021, from 6.3% year-on-year in February 2021. The risks according to the EDB’s projections remain high. Nevertheless, even with an unfavourable, prolonged pandemic, the Bank's member economies will be recovering in 2021.