G20 economies managing the headwinds of COVID-19 pandemic with V-shaped recovery expected in 2021, says GlobalData

A V-shaped economic recovery is expected in most G20 nations in 2021 as lockdown restrictions are removed and vaccinations are rolled out. G20 GDP growth in 2020 remained below the pre-crisis high, with a contraction of 4.6%. However, GDP is anticipated to observe 5.2% growth in 2021, says GlobalData, a leading data and analytics company.

Shruti Upadhyay, Economic Research Analyst at GlobalData, says: “A shift towards a ‘digital economy’ has been noticed in G20 economies, with the ‘work-from-home’ trend gaining traction. The shift towards mass vaccination is likely to fuel economic recovery and positive quarterly growth for these nations.”

Upadhyay continues: “While forecasts are still shifting, as some nations are facing second and third waves of COVID-19 infections, all G7* economies are currently expected to witness a positive GDP growth in Q1 2021. France is likely to witness the fastest growth in Q1, followed by the UK and Germany.”

According to GlobalData, India and China are anticipated to lead GDP growth among G20 economies, with a respective 9.7% and 8.7% (Y-o-Y%) growth in 2021. Double-digit growth was witnessed by countries in Q3 2020 (Q-o-Q%) such as France (18.5%), Italy (16%), the UK (16%) and Turkey (15.6%).

When comparing the data with the previous year (Q3 2019), Turkey and China were the only two countries observing stronger-than-expected positive GDP growth rate at 5.4% and 4.9%, respectively, in Q3 2020 – outperforming G20 economies. Turkey’s growth was driven by its fiscal stimulus, supporting loan growth coupled with low interest rates and easing of lockdown restrictions. On the other hand, China’s robust export growth, pent-up demand and investment-focused government policies with high-frequency data reflecting signs of normalisation supported growth in Q3 2020.

Upadhyay continues: “The manufacturing PMI growth for G20 economies noticed a marginal decline in January 2021 with the discovery of new strains of COVID-19 in the UK and South Africa. Countries with contracted manufacturing PMI were Japan (49.7 in Jan 2021 from 50 in Dec 2020), Germany (57 in Jan 2021 from 58.3 in Dec 2020), and the UK (52.9 in Jan 2021 from 57.5 in Dec 2020). The G20 economies also observed a dramatic stalling of new export orders with Chinese New Year and shipping container shortages. The UK observed supply chain disruptions in January 2021 as a result of Brexit-related transport delays.

“The G20 economies are focusing on a sustainable recovery in 2021 with digital transformation acting as the heart of economic recovery. With COVID-19 cases slowly subsiding, the jointly co-ordinated efforts of these economies are expected to provide equitable and accessible resources to nations for mass vaccinations drives critical for overcoming the pandemic.”

* The US, the UK, Japan, France, Germany, Italy and Canada

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