1. Global economic overview – major economies The global economy is expected to rebound in 2021 on expansive fiscal and monetary stances and the vaccine rollout. However, fast-spreading COVID-19 variants will lead to stop-start restrictions in some countries, weighing on activity. Potential vaccineresistant strains of the virus, supply constraints and US-China tensions pose downside risks.
Global inflation is also expected to increase in 2021— particularly in developed economies—amid sizable stimulus, higher commodity prices, supply bottlenecks and recovering economic activity. However, inflation should decline in some developing economies amid reduced currency pressures and ongoing economic slack.
In the US, GDP growth accelerated to 6.5% in
Economic activity in the eurozone is forecast to grow by 1.3% in the second quarter, before accelerating to 2.9% in the third, on the back of continued easing of containment measures and the resumption of social activities. Growth momentum in the fourth quarter is forecast to ease but to remain solid at 1.3%.
seasonally adjusted annualised rate terms in the second quarter of 2021, from 6.3% in the first quarter, although this figure considerably undershot market expectations. Private consumption roared ahead with 11.8% growth in the second quarter, which was above the first quarter’s 11.4% expansion, driven by the return of Americans to restaurants and other in-person activities. However, public spending went into reverse, contracting 1.5% in second quarter of 2021 against 4.2% in first quarter of 2021. Meanwhile, fixed investment growth slowed, with only a 3.0% rise in the second quarter, marking the worst result since second quarter of 2020 against a first quarter 13.0% growth rate. This was likely due in part to supply bottlenecks, particularly in the construction sector, with a sharp fall in inventories of goods being testament to such difficulties. Exports of goods and services bounced back, growing 6.0% in second quarter of 2021 against -2.9% in the first quarter. Conversely, growth in imports of goods and services slowed to 7.8% in the quarter versus first quarter 9.3% growth rate.
In Euro Area,detailed national accounts data revealed ththe two main reasons for the revision are that activity in the first quarter of the 2021 exceeded expectations and the improved health situation prompted a swifter easing of pandemic restrictions in the second quarter.
The economies in Euro Area have been able to reopen faster than expected thanks to an effective containment strategy and progress with vaccinations. Gross domestic product in the 19-member eurozone is expected to grow by 4.6% in 2021, according to IMF July 2021 projections.
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In 2022, the eurozone economy is expected to expand by 4.3%. According to the EU commission, some member states will see their economic output return to their precrisis levels already by the third quarter of 2021, but others will have to wait longer. Among the largest member states, Poland is expected to have returned to pre-crisis levels of output in the second quarter of 2021 and Germany and the Netherlands in the third quarter, while Spain and Italy will do so one year after, in the third quarter of 2023. Private consumption and investment are expected to be the main drivers of growth, supported by employment that is expected to move in tandem with economic activity. The swift reopening underway in the EU member states is bringing back spending opportunities earlier than previously expected. Strong growth in the EU’s main trading partners should also benefit goods exports. Furthermore, despite remaining constraints to international tourism, there is evidence of a revival in intraEU tourist activity, which should further benefit from the new EU Digital COVID Certificate. Rising energy and commodity prices, production bottlenecks, as well as strong demand at home and abroad are expected to put upward pressure on consumer prices in 2021. The European Commission has revised its inflation forecasts to 1.9% in 2021, from 1.7% in the Spring forecasts and to 1.4% in 2022 from 1.3%. Although prices pressures in 2022 should moderate gradually as production constraints are resolved with supply and demand converging. Uncertainty and risks surrounding the growth outlook are high, but remain balanced overall. The risks posed by the spread of COVID-19 variants underscore the importance of further increasing the pace of vaccinations.
State of the Metals & Engineering Sector Report - First half of 2021 review 2021-22
