IPC Releases March 2021 Economic Outlook: Global Economy Expected to Expand 6 Percent in 2021
The recently passed $1.9 trillion stimulus package (i.e., the American Rescue Plan Act of 2021) significantly ratchets up the growth outlook in the United States for 2021 and carries some of that growth into 2022. We have raised our forecast for the first quarter from 2.9 percent to 4.7, and for the entire year, the forecast increases to 5.7 percent from 4.9 percent. The total economic stimulus in the United States now totals about 38 percent of U.S. GDP, compared with stimulus measures in Europe, which represent about 21 percent GDP. As a result, the U.S. recovery will accelerate and further diverge from Europe, which will likely see flat to negative growth in the first quarter. But even as we move beyond the first quarter, the growth in the United States will far outstrip growth in Europe.
China is also set to see strong growth in 2021. Earlier this month, Chinese Premier Li Keqiang announced the country would target growth of over 6 percent for 2021. Our current forecast is calling for 8.4 percent growth. China grew 2.3 percent in 2020, the only major economy to grow during the year.
The strengthening recovery in the United States will help other countries as well. Mexico and Canada will both benefit, as will countries like China. The overall global economy shrank roughly 3.8 percent in 2020. It is expected to expand 6 percent in 2021.