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Global Economy: USA and China Leading the Way, Europe Lagging Behind: DIW Economic Outlook Spring 2021

DIW Weekly Report 11 / 2021, S. 90-93

Claus Michelsen, Guido Baldi, Paul Berenberg-Gossler, Geraldine Dany-Knedlik, Hella Engerer

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The resurgence of the pandemic and renewed lockdowns have slowed the recovery of the global economy, but the overall losses will be less severe than after the first coronavirus wave in spring 2020. Industry in particular continues to develop well. In contrast, retail trade and personal services have been heavily affected, especially in hard-hit regions such as Europe. However, the fiscal stimulus cushions much of the distortions. With increasing levels of immunity, most economic restrictions will be lifted beginning in the second half of 2021, which should boost private consumption. Due to strong growth in the US and China, DIW Berlin is increasing its forecast by 0.4 percentage points for both 2021 and 2022 and expects growth of 6.7 and 4.8 percent for each year, respectively. Global production should first be able to reach its long-term growth path by the end of 2022. Although the Brexit Deal and the end of Donald Trump’s presidency have eased some global uncertainties, risks still remain, especially from new waves of coronavirus infections and sharp increases in insolvencies.

Geraldine Dany-Knedlik

Head of Forecasting and Economic Policy in the Macroeconomics Department

Guido Baldi

Research Associate in the Macroeconomics Department

Hella Engerer

Research Associate in the Energy, Transportation, Environment Department

JEL-Classification: E32;E66;F01
Keywords: Business cycle forecast, ecoomic outlook

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