What will 2021 bring for the global economy? Projections from the United Nations (UN), International Monetary Fund (IMF), and World Trade Organization (WTO) say the following five things just might happen.
The world is slowly getting older. Longer lifespans combined with falling fertility rates mean the world’s typical person gets a little older each year. In 2021, the global median is expected to hit 31 for the first time in recorded history, according to projections from the United Nations. An older world means a higher share of global spending on health care, and less on child care.
For a good example of how the world’s population is shifting, look no further than Tanzania and Italy. From 1995 to 2020, Tanzania’s population more than doubled from 30 million to 60 million people. In 2021, the UN projects that Tanzania will become the world’s 23rd most populous country, surpassing Italy, where the population has begun to decline due to low birth rates. These countries represent the broader trend of Africa’s population increasing fastest among the world’s continents, while Europe’s remains stagnant.
Global GDP is set to hit $90 trillion, according to estimates from the IMF. The IMF projects that after at after a 4.4% dip in 2020, the global economy will grow by 5.2% in inflation-adjusted terms. The $90 trillion is not adjusted for inflation, but is still a useful number for putting economic metrics in perspective. For example, Microsoft had a $1.6 trillion valuation at the time of writing, meaning it is worth almost 1.8% of all of the money that will be spent next year.
IMF projections suggest that an increasing share of global GDP will move to Asia in 2021. It estimates that “emerging and developing” countries in Asia, like China, India, and Malaysia, will grow by 8%, compared to 3.9% for “advanced economies,” such as the US, Germany, and Japan.
One of the most countries most representative of a rising Asian economy is Bangladesh. It’s the only country in the world expected to grow by more than 2% in both 2020 and 2021. The country’s continued growth is driven by its textile manufacturing industry and will likely result in its GDP per capita to surge past that of Pakistan, the country it declared independence from in 1971.
The WTO expects global trade volumes to fall by 9.2% from 2019 to 2020, but then bounce back with 7.2% growth in 2021. This would still mean an overall fall in trade volumes over the two years. Even before the pandemic, global trade was declining primarily due to a combination of trade tensions between the US and China and falling oil exports.
Vietnam is bucking the trend. The IMF projects that its exports will drop 3% in 2020 and then soar by 15% in 2021, exceeding $300 billion for the first time (before adjusting for inflation). As recently as 2014, Vietnam exported less than Malaysia and Thailand, but it has already far surpassed them and is expected to further expand the gap between them. Vietnam’s trade growth is from exports of electronics and apparel to the US and China.