The Covid-19 pandemic had an adverse effect on all fields in 2020. Needless to say, economic growth was similarly impacted. Though the degrees at which the countries were affected varies, 2020 was a year that witnessed a serious decline in the global economic growth.
As the data of 2020’s final quarter remains unknown in most countries, including Turkey, the annual global growth figures are yet to be announced. However, based on the figures for the first three quarters and the leading indicators in the final quarter, positive economic growth is anticipated.
For example, according to the 2020 World Economic Outlook Report prepared by the International Monetary Fund (IMF), global economy is projected to grow at 3.5 percent.
2021 ECONOMIC GROWTH EXPECTATION
According to the IMF report, the economic growth rate for 2021 is expected to be relatively higher compared to 2020. While the vaccination process that started in 2021 presents good news for economies, even if gradually, the onset of the new wave in Europe and the emergence of a new strain of the virus poses a major risk in terms of economic growth.
Meanwhile, it should not be forgotten that the recession in 2020 will lead to a change in the calculation of economic growth in 2021 due to the base effect. Thus, the IMF forecasts that the global economy will grow 5.5 percent in 2021.
Considering this forecast in terms of developed and developing countries, it is predicted that developing countries will see a greater growth. While the economic growth expectation for developing countries is 6.3 percent, the same rate for developed countries is expected to be at 4.3 percent.
As the economic growth rate for China, which experienced the highest growth among developing countries, is forecasted at about 8 percent once again, the same rate for India is expected to be 11.5 percent. The economic growth forecasted for Turkey, on the other hand, is 6 percent.
While the U.S. economy, a developed country with the world’s biggest gross domestic product (GDP), is expected to shrink 3.4 percent in 2020, the economic growth expectation for 2021 is 5.5 percent.
According to the IMF, the recovery in the global economy will vary across countries. Furthermore, rapid economic growth is dependent on certain conditions. For example, access to healthcare and thus the vaccine, the efficacy of policy support, and countries’ various structural characteristics are among the top factors.
ECONOMIC SUPPORT WILL BE GREATEST STRENGTH OF ECONOMIC GROWTH
While the negative impact of the vaccination speed and the new virus strain on economies during the pandemic period remains unknown, it is clear that government support is critical in terms of economic growth.
Ensuring adequate access to international liquidity is extremely significant in terms of economic growth, and the sustainability of this growth, especially for poor countries and developing countries that have the potential for high economic growth, but are experiencing financial difficulty and have high public debt.
Thus, reaching international liquidity under suitable terms, and ensuring that this resource is directed towards investments that will contribute to economic growth is crucial. Of course, in order to achieve this, steps need to be taken to ensure that the recently decreasing direct international investments worldwide flow into national economies once again.
Borrowing under suitable conditions and drawing direct foreign investment is directly related to confidence in the economy, reduced uncertainty, and an improved investment atmosphere.