August 2021

Getting to grips
with the pandemic
Atradius Economic Outlook

Atradius Economic ResearchJohn Lorié, chief economist

Dana Bodnar, economist

Theo Smid, senior economist

john.lorie@atradius.com+31 (0)20 553 3079
dana.bodnar@atradius.com+31 (0)20 553 2169
theo.smid@atradius.com+31 (0)20 553 3165

Disclaimer
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Copyright Atradius N.V. 2021

Executive summary
As vaccination campaigns are underway, the world economy is recovering from the pandemic. Most
advanced markets have already vaccinated large parts of their population, while the outcome is more
mixed in emerging markets. Global GDP growth in 2021 will be mainly consumer driven, as spending
opportunities, mainly in services, are opening up. Monetary policy will remain very loose despite
inflationary pressures, and fiscal support packages are partially extended in 2021. However, global GDP
growth could be threatened by the spread of new, more transmissible variants of the virus. Such adownside scenario could significantly push down growth in 2021 and in 2022.

Key points
As the vaccination rollout gets underway, economies are gradually opening up, leading to a global GDP recovery of 6.2% in
2021, followed by a forecast 4.7% growth in 2022. A risk to the recovery is posed by new, more transmissible variants of theCovid-19 virus.
We expect a robust and broad-based recovery of global trade in 2021. China´s economy was outperforming in early-2021,
but other regions have caught up in recent months. Global trade is expected to grow by 6% in 2021, followed by a similar
amount in 2022.
Advanced economies are expected to surpass pre-crisis activity levels in 2021. GDP in advanced markets as a group isforecast to grow by 5.8% in 2021, followed by a 4.2% increase in 2022.
Despite the ongoing vaccination campaign, eurozone economies are still struggling with the Covid-19 virus. We expect arecovery of 5.0% in 2021, followed by a slightly lower increase in 2022. All member states are expected to see GDP levels
recovering to pre-pandemic levels by the end of 2022. However, the rebound is uneven, with tourism-dependent countries
in Southern Europe lagging behind their Northern peers.
The US economic outlook has strengthened markedly since our February Economic Outlook. Apart from the UK, the US iswell ahead of most other advanced countries in vaccinating its population, and the economy reopened during the first halfof the year. Additional support is coming from a major (USD 1.9 trillion) fiscal stimulus package, approved by Congress inMarch 2021, and a USD 1.0 infrastructure bill approved in August.
The Japanese economy rebounded in the second half of 2020, but saw a temporary setback at the beginning of 2021, due torising infections. Despite the weak start, the economy is showing a robust recovery in H2 of 2021. The economic stimulus
from the Tokyo Olympics will be smaller than previously expected, as they were held under a state of emergency.
The economic recovery of many emerging market economies (EMEs) lags behind, mainly due to a slower vaccine rollout.
Additionally, the scope for fiscal stimulus is more limited. Asia is the region with the highest growth rate among EMEs,
while particularly MENA and Sub-Saharan Africa lag behind. Economic growth across EMEs is forecast to recover by 6.9%
this year, followed by another 5.3% growth in 2022.

3 | Atradius Economic Outlook – August 2021

1. The global macroeconomic environment
Game changers revisited
In our February 2021 Economic Outlook we wrote about
game changers for the Covid-19 affected global economy,
expected to pull it out the worst economic slump since theGreat Depression. First and foremost was the announcementof successful development and testing of Covid-19 vaccines.
In early 2021 mass vaccination was about to be rolled out,
promising a notable reduction of the number of cases, andthere was hope for a return to normality by the end ofsummer 2021. The other major change was the election of
Joe Biden as US president, expected to reduce major
uncertainty over US policies on global trade andinternational relations. Additionally, the EU proved its ability
to take steps towards further integration (a move notuncommon during crises). The EU agreed on allowing its
members massive fiscal stimulus packages and, mostimportantly, set up a EUR 750 billion fund for post-pandemic
recovery, the so-called NextGenerationEU. Brussels also
agreed with the United Kingdom on a post-Brexit free tradezone.
Let us consider the development of the pandemic first. The
trend in recent weeks is upwards due to the moretransmissible Delta variant, which is becoming dominant,but with around 550,000 global cases per day in earlyAugust, we are still below the April (900,000). Deathnumbers are increasing as well, but less rapidly. In advanced
economies, the vaccine rollout is progressing at a robust
pace. Cases in the badly-hit US (37 million cases, 630,000
deaths so far) are rising, but in recent weeks the number ofdeaths was relatively low. A similar pattern - rising cases,
relatively low deaths - is visible in major European countries
such as Germany, France, and Italy, albeit that infections inGermany and Italy are only mildly increasing. The picture in
emerging economies is mixed. Despite recent local
outbreaks, China remains largely in control, while India
suffered from a high infection way in spring, peaking at
almost 400,000 registered daily cases. Meanwhile, thenumber of cases has decreased to a less than a tenth of thatlevel. Dynamics are less favourable in Turkey and Russia,
which both experience a new peak in infections. Brazil
continues to struggle as well: while it has managed to reduce
the numbers, infections relative to the size of the population
remain elevated. It could be said that the dynamics in cases,
are becoming less favourable on a global level than several
weeks ago, due to the more transmissible Delta variant.
However, the number of deaths is still much below theprevious peak. This development should be considered in thelight of the vaccination rollout, the first game changer.
Globally 2.4 billion people have received at least one dose ofa vaccine, and 1.2 billion are fully vaccinated. However, thisis still a relatively low share of the global population.1
Moreover, there are large differences between advanced andemerging economies. Advanced economies such as the US
and the UK have managed to vaccinate significant parts ofthe population at least once. Vaccination rollout in European
countries such as France, Germany, Italy, and Spain took
more time to take off, but has meanwhile reached relatively
significant levels, with between 60 and 75 out of 100
inhabitants have received at least a first dose. This is in stark
contrast with emerging economies, where this indicator is
between 10 and 55 for large emerging countries such as
China, India, Turkey, Brazil, and South Africa.
Over a couple of months there was a clear negative
relationship between vaccination and the number of cases.
However, this is now less so, due to the spread of new andmore transmissible variants of the virus (see figure 1.1 and
1.2). However, there is a clear negative relationship between
vaccination and hospitalisation. Therefore, vaccination
remains the best way to get out of the pandemic. In thissense advanced economies will have a head start, as theirvaccination campaigns are far more progressed compared toemerging economies.
1.1 Vaccination does not prevent spread of Delta variant

1

According to Our World in Data (10-08-2021), only 30% of the eligible
population has received at least one dose. Only 16% is fully vaccinated.

Atradius Economic Outlook – August 2021 | 4

1.4 Economic policy uncertainty back to pre-pandemic levels

The low vaccination rate in some emerging economies is not
only a local issue, as it may cause variants to develop andspread across the globe. For instance, the Delta variant(originating in India) is far more infectious than other Covid19 variants. Delta has caused the number of cases to increasein countries like the UK, now spreading across Europe, as
well as in Israel. However, as hospitalisations havedecreased considerably in advanced economies,
governments continue to ease lockdown measures, although
by far not completely (see figure 1.3).2 The pandemic is stillamong us, contrary to expectations earlier this year, and canbe expected to stay around for some time.

Regarding the second game changer, the election of Joe
Biden as US president, the assessment is more upbeat. The
US has returned to the international stage, signalled mostprominently by re-committing to the ‘Paris’ Climate
Agreement. Moreover, Washington´s attitude and tone in the
G7, G20, NATO and other international organisation andforums is more directed at pursuing US interests withmultilateralism. A major benefit of this approach is the
sharply decreased uncertainty over economic policies. This isreflected in the economic policy uncertainty index returning
to pre-crisis levels (see figure 1.4 above). Research has
shown that reduced uncertainty supports investment andspending by businesses and households, in the US andelsewhere. Next to a return to more international
collaboration the Biden administration has done more. A
USD 1.9 trillion fiscal stimulus package (8% of GDP) wasapproved by Congress in March 2021, including a USD 1400
cheque per household to alleviate the impact of thepandemic. Furthermore, a package of USD 2.3 trillion
additional spending over an eight-year period, called theAmerican Jobs Plan, is still under discussion, targeting
infrastructure, energy efficiency, digitisation, as well as R&D.
A USD 1.0 trillion infrastructure bill was passed by the US
Senate in August 2021.

Index

1.2 Vaccination does not prevent spread of Delta variant

1.3 Stringency of health measures reduced, but still there
Stringency index selected countries 2021
Spain
Italy
FranceGermany
United Kingdom
United States
RussiaMexicoBrazilTurkey
India
China

0

20
July

40

60

80

100

February

Source: Oxford Covid-19 Government Response Tracker, Atradius

2

The stringency index is a composite measure based on nine response
indicators including school closures, workplace closures, and travel bans,
rescaled to a value from 0 to 100 (100 = strictest). If policies vary at the
subnational level, the index is shown as the response level of the strictest
sub-region. See Thomas Hale , Noam Angrist , Rafael Goldszmidt , Beatriz Kira ,5 | Atradius Economic Outlook – August 2021

Finally, the EU has taken further steps to support theeconomies of its members. Individual member-states havebeen allowed to bolster the economic impact of lockdown
measures with large stimulus. In addition, progress has been
made with the EUR 750 billion NextGenerationEU recovery
package. Member-states have submitted proposals tounderpin their allocations, while the bloc issued an inaugural
EUR 20 billion 10-year bond as part of the financing in midJune. Meanwhile, the relationship with the UK after Brexit
remains somewhat fraught with thorny issues, such as
renewed disputes over the Irish Sea border agreement andUK ‘divorce’ payments.

Anna Petherick , Toby Phillips, Samuel Webster, Emily Cameron-Blake , Laura
Hallas, Saptarshi Majumdar, and Helen Tatlow. (2021). “A global panel
database of pandemic policies (Oxford COVID-19 Government Response
Tracker).” Nature Human Behaviour. https://doi.org/10.1038/s41562-02101079-8.

A consumer-led recovery
We perceive the (far-from-perfect) vaccines rollout, changed
US policies in international affairs combined with fiscal
policy efforts, and the EU economic support undeniably as
game changers. While they have begun to show their effects,
adjustment in the global economy is taking place, weakening
the link between the development of the pandemic andeconomic growth. Consumers play a key role in this.
While their income has been preserved by government
support, consumers were (and to some extent still are)constrained in spending on services, such as restaurants,
hotels, and travel. Most cultural activities and events could
not be offered during lockdowns. As a consequence,spending on goods such as cars, furniture, household
appliances and sporting gear increased. This resulted ingeared up demand for manufactured products, supporting
sentiment indicators and prospects for growth.

savings and gearing up spending on services as well, madepossible by the easing of restrictions. This is exactly what
composite PMIs are telling, with the US showing strong
expansionary tendencies since early this year, as the PMI
stood at 59.7 in July. The eurozone PMI is also high at 60.6,
up from a low of 48 at the beginning of 2021. The Chinese
PMI has been lagging behind, remaining in a 50 to 55 range
during the year. In other major emerging economies,
including Brazil and Turkey, PMIs are generally picking up
as well.
1.7 Sentiment riding high

1.5 Savings ratios have shot up

1.8 Across the board recovery in Q2
GDP growth per quarter annualised (% change y-o-y)
20
15
10
5
0

1.6 Consumption drives recovery-5
Eurozone

UnitedStatesChina

Q1 2021

Latin
America

EasternEuropeWorld

Q2 2021
Source: Oxford Economics, AtradiusIndeed, the manufacturing Purchasing Managers Indices(PMIs) for the US, the eurozone and China have gradually
increased since summer 2020, with a marked acceleration
since early 2021. Both the US and eurozone PMIs have now
reached levels comfortably above 60, which indicates strong
expansion, while China´s PMI is still hovering at just above
50, the threshold for expansion. Meanwhile, consumers areready to take the second step, unleashing their excess
3

The reader should be aware of ‘base effects’ when reading this graph. The
Covid-19 pandemic partially affected Q1 of 2020 and had a full (stronglyThis bodes well for GDP growth during the rest of year.
Except of China (where the pandemic has been under control
for quite some time) and the US (which has shown
remarkable resilience even during lockdowns), Q1 of 2021
was still a very weak economic period, as measures weretightened again to address a new wave of Covid-19
infections. As PMIs indicate this is going to change, with astrong global recovery estimated to have started in Q2 (seefigure 1.8). 3 Real strong rebounds are expected in the
eurozone, Latin America and Eastern Europe. China and the
US are expected to consolidate their strong start of the year.
The positive overall picture is reflected in the upgrade of ourforecast of global economic growth. Under our baseline
scenario global GDP is expected to grow by 6.2% in 2021, up

recessionary) impact on Q2. In spite of this, the picture for 2021 captures the- expected - Q2 turning point in global GDP growth.

Atradius Economic Outlook – August 2021 | 6

by more than 0.8 percentage points compared to the
February forecast. Emerging Asia, led by China and India,
stands out with 7.7% growth, followed by the United States.
US growth is boosted by a successful vaccination rollout
coupled with strong fiscal stimulus. GDP is expected toincrease by 7% this year, up no less than 3.5 percentage
points compared to our previous outlook. Other regions are
expected to do better as well compared to February, although
to a far more limited extent. Latin America´s recovery,
helped by much higher commodity prices, is expected to bejust above the global average at 6.5%. Eastern Europe´s GDP
is forecast to rebound 5.1% from a mild 2020 recession. With
5% we expect the eurozone to be the region with the lowest
percentage growth this year. The global recovery is expected
to level off in all regions in 2022.
Table 1.1 Real GDP growth (%) - global regions
Eurozone

2020

2021f

2022f

-6.7

5.0

4.6

United States

-3.5

7.0

4.3

Emerging Asia

-0.1

7.7

6.0

Latin America

-6.8

6.5

2.9

Eastern Europe

-2.2

5.1

3.8

World

-3.6

6.2

4.7

Sources: Oxford Economics, Atradius
1.9 US drives upward forecast revisions
Forecast changes since February 2021 Outlook (% point changes)
World
Eastern Europe
Latin America
Emerging Asia
United States
Eurozone
-1

0
2022

1

2

2021

3

4

2020
Source: AtradiusThis forecast means that the global economy will havewidely recovered from the pandemic before the end of 2021.
Both Emerging Asia and the US have already passed thispoint, while it will take longer for other regions. Emerging
Europe´s economy will have fully recovered from thepandemic before the end of 2021, while for Latin America
and the eurozone it will be in the course of 2022.
Our forecast is based on a number of closely connectedassumptions. Firstly, governments, especially those in the US
and Europe, retain their grips on the pandemic, able toeffectively contain new surges of the virus or variants of it(such as the Delta variant). Where restrictions are being reimposed they are short-lived, and economic damage iscontained. Secondly, vaccine rollouts will continue and not
be hampered by supply constraints (such as those we haveseen in spring). For emerging economies, vaccine rollout will

7 | Atradius Economic Outlook – August 2021

be slower, and consequently the economic recovery will be
slower as well. Vaccines have a strong impact in the sensethat they are effective in sharply reducing the risk of serious
illness, let alone death. Thirdly, the recovery will be
consumer-led as described above, with households willing tospend incomes as well as part of their excess savings
accumulated during the pandemic. Excess savings are
assumed to be gradually and only partially spent, i.e. 5% to
10% over a period of 2 to 3 years. The majority of excess
savings will be retained as wealth. Fourthly, as healthmeasures are lifted, governments are rolling back fiscal
support that was maintained in 2021 to buttress GDP growth.
Support will nevertheless be kept up, especially in advanced
economies, to the extent it is needed when a surge of thevirus temporarily requires the re-imposition of restrictions.
Moreover, governments carefully craft a gradual retreat of
direct support and actively help the recovery take off.
Whereas government balances will improve as fiscal support
is rolled back, no fiscal tightening, and certainly not to theextent we saw after the Great Financial Crisis, is expected.
Fifthly, we see no monetary tightening of any significanceover the forecast period (2021-2022) in the advanced
economies. In the US, but over time also in the eurozone,
asset purchases will be reduced as the recovery is on astronger footing, while interest rate hikes are not on thecards. This supports businesses and, perhaps even more
important, allows governments to borrow at low costs,
helping them to support the recovery, or at least avoid
hampering it by fiscal tightening. While this sounds
plausible, it all depends on the development of inflation, of
which we have seen a bout recently. We assume that thecurrent spike in inflation is strongly related to the reopeningof the economy, especially the services sector, anddevelopments in the oil market (see chapter below). Input
prices and supply chain issues in the manufacturing sector
also play a role. However, those are transitory events, and so
are related price rises. Sixthly, the ample money supply
provided by the major central banks implies that asset
prices, including equities and housing, remain supported.
Consumption is therefore kept up, in particular in the US,
where spending is strongly linked to wealth.
Seventhly, economic scarring, which manifests itself inlower capital outlays, labour supply and technology growth,remains limited. Government measures limit the erosion of
employee skillsets and the dismantling of businesses andinsolvencies. This is crucial for the supply side of theeconomy in order to remain more or less intact, and to avoid
a situation where pent-up demand in the recovery cannot be
met by supply, leading to soaring inflation. Scarring is only
avoided if the pandemic, and more importantly its economic
impact, is being controlled. The longer the pandemic lasts,
and the larger the impact remains, the more scarring occurs.
Eighthly, we assume that the improvement in trade relations
lead to a smoother trade development. The US has partly
normalised trade relations with the EU, while those between
the US and China will remain in stalemate mode for the time
being. The measures taken by the Trump administration
against China have generated bipartisan support in the US.
Biden and the Democrats, traditionally more inclined

towards protectionism than the Republicans, will not be
tempted to change that rapidly.

1.11 Services trade picks up gradually
World trade, index, 2019=100120
100Robust trade growth to slow

80
60

The global trade deterioration in 2020 (down 16% in Q2, with
global services trade hit even harder), was followed by afaster than expected rebound. Despite trade impediments,
reflected in high trade cost, and still sluggish services trade,
we expect trade recovery to continue. Global trade is forecast
to increase more than global GDP growth, between 8% and
10% in 2021 and 6% in 2022.4
The pre-pandemic goods trade level had recovered alreadysix months after the collapse. This recovery over the lasttwelve months was broad-based, with cars, capital goods,
consumer goods and industrial supplies back at or even
above pre-pandemic levels of late-2019. Incoming 2021 data
until May show the resilience of trade growth, with China
strongly outperforming other markets in the first months ofthe year, and other regions following as of March.5
1.10 Promising trade growth in 2021

40
20
0

Goods

Services

TravelSource: CPB, AtradiusCompared to goods trade, services recover much more slowly
and divergently across regions and sectors. While
telecommunications and financial services were back at prepandemic levels in the spring of 2021, travel services were at
65% of pre-pandemic levels or even below, as tourism
remains depressed. Across regions the picture is fairly
uneven as well. Services trade in the East Asia and Pacificregion was strong and had already recovered to prepandemic levels in late 2020. Other regions lag behind,largely due to restrictions imposed on the services sector,
most prominently those on (international) travel. Even incountries without major outbreaks of the pandemic, arrivals
remain restrained.
Under our baseline assumption of a fading pandemic, therecovery of trade gains momentum in the coming months,
with service recovery accelerating in relation to
manufacturing. Current supply bottlenecks and strains in
global supply chain, which raise trade costs and hamper
trade, are expected to dissipate during the coming year and ahalf. Supply bottlenecks (prominently expressed by a very
high Baltic dry index, see figure 1.12) will abate as trade
growth slows, container capacity is expanded and Covid 19related extensions of customs and other logistical processes
will be relaxed.
Additionally, global supply chain strains have beenaddressed by businesses in order to increase resilience andmitigate logistical issues. Measures include diversification of
suppliers and productions outlets, which should lead tosmoother trade as well.

4

Our trade section now includes trade in services more explicitly. This is not
only for the sake of completeness, as services accounts for about 16% of
global trade. In particular, the diverging developments in the manufacturing
and services sector caused by the pandemic require this inclusion.

5
Figure 1.10 shows the trade growth in the first five months of 2021. Whenassessing these figures, the reader should be aware of the strong ‘base’effects that underlie the fairly extreme y-o-y annualised monthly trade
growth figures due to the early 2020 trade collapse.

Atradius Economic Outlook – August 2021 | 8

1.12 Services trade picks up graduallyIndex

goods.8 The Biden administration has left them in place forthe time being. At the same time, while it is clear thatmeeting the import commitments will be extremely
challenging for China (to date imports have remained way
below the commitment) no further tariffs have been
imposed. The trade war now looks more like a trade truce,
and this is expected to last in 2021-2022.

Oil price rise not sustainable

While all this is good news for global trade, the long-term
perspective is one of decreasing global trade growth, inching
towards global GDP growth rates. While trade elasticity(change of trade growth due to change of GDP) was 2.2 in the
1990-2011 period, it decreased to about 1 during the rest of
the decade. 6 This development is due to several structural
factors. The composition of global demand has shifted
towards emerging economies. However, those economies are
generally less open, implying they trade less than what is
produced. Additionally, countries (in particular China) moveaway from investment-led growth as they develop,
implicating less trade-intensive growth. Global supply chains
have matured as well, with the overall supply chain share inglobal trade stagnating since 2011. Other determining factors
are trade tensions, rising labour costs, and mounted supply
risks due to political developments. Furthermore, tradeliberalisation stagnates, not so much due to imposed tariffs,
but rather due to regulations and non-tariff barriers.
The overall climate for trade paints a mixed picture. It hascertainly improved with the arrival of the Biden
administration in early 2021. In particular, trade policy
uncertainty has notably decreased, as the US acts morepredictably and collaboratively in trade matters. Moreover,
the threat of a trade war between the US and EU is now far
off. Brussels and Washington have recently agreed on asettlement for the 17-year old Airbus-Boeing trade dispute,
thus avoiding imposing punitive tariff levies on both sides.
This is promising, and goes even beyond mere
normalisation. 7
However, in the US-China trade relationship matters aredifferent. The Trump administration put the international
competitiveness issue related to the Chinese approach of theeconomy (where state-owned firms and large subsidies playa pivotal role) on the agenda. This has gained bipartisan
approval in the US, but also in the EU. Previous US
administrations may have been more careful in imposing aseries of tariffs, levies, and commitments to import US

6

Global Economic Prospects, Chapter 3: High Trade Costs, World Bank June
2021.
7
The dispute was about subsidies that countries offer to both aircraft makers.
8
Under the so-called US-China agreement of February 2020 China committed
to purchase USD 200 billion additional US goods in 2020 and in 2021.
9
Like in previous outlooks we refer to the low elasticities of oil demand andsupply that could be the source of fairly large swings around this average. For

9 | Atradius Economic Outlook – August 2021

The oil price has continued its rise after the big slump in
April 2020. In February 2021 it was about USD 50 per barrel
Brent, while currently we face levels above USD 70. We
forecast prices to average USD 60 per barrel in the period
until the end of 2022. 9 Futures prices support this view, withmarkets in so-called backwardation, meaning that future
trades in oil are at lower prices, such as at around USD 60 for
December 2022.10 To assess our forecast, several factors
need to be taken into account.
Firstly, the impact of Covid-19 on the global economy has
been overestimated. Above we showed that the 2020
economic contraction was very severe, even more severe
than during the Global Financial Crisis, but lower thaninitially expected. Likewise the 2021 recovery took less time
to take off (especially in the US), and is now expected to besignificantly faster than earlier predicted. Although thetransport sector, particularly private air transport, is still
depressed, demand from other parts of the economy, such as
the manufacturing sector, has been buoyant. The impact ofthe pandemic on GDP developments has clearly weakened.
This has certainly helped to buttress oil demand, which
shrunk by 9 million barrels a day (or 16% of total) during theheight of the pandemic, down to 88 mb/d. In 2021, a level of
96.5 mb/d is forecast, further rising to 99.4 mb/d in 2022,
when pre-pandemic demand levels are expected to bereached again.
Secondly, the underlying trend in demand for oil is still
upwards, but to a lesser extent. The pandemic caused a shockin the energy markets and has accelerated ongoing trends inenergy consumption, away from fossil fuels and towards
renewable energy. This development is expected to last.
Behavioural changes seen during the pandemic, such as
working from home, online buying and less travel may bereversed, but only partially. Moreover, in the EU and US postpandemic recovery plans contain sizeable energy transition
elements, buttressing the behavioural trend and providing
further measures towards a cleaner environment. Thisimplies that in the longer-term demand for oil will grow at a
slower pace.

example, if demand is reduced by 9 million barrels per day like in spring
2020, inventories are first running up before OPEC starts to agree on
production cuts, preventing quick price support.
10
July 19 price. See
https://www.barchart.com/futures/quotes/CB*0/futures-prices.

Thirdly, on the supply side OPEC + (the traditional OPEC
members plus major oil exporters such as Russia, Mexico
and Kazakhstan) has reacted swiftly with supply cuts during
the pandemic, leading to a rapid recovery of the oil price,which had decreased to USD 30 per barrel in the early daysof the pandemic. While during the demand collapse the cartel
swiftly agreed on production quotas, recent meetings suggestthat agreeing on output shares when demand is increasing
again tends to be more difficult.
There are several factors at play at OPEC+. The UAE has
invested heavily in oil production capacity over the past
couple of years in order to generate revenues for its
economic diversification strategy. However, currently about
30% of this capacity sits idle. The UAE´s desire for increasing
production is opposed by Saudi Arabia, which fears that
other countries like Russia would submit similar demands,
undermining current price levels. Additionally, OPEC
member Iran is currently discussing with the US a deal on its
nuclear ambitions. Such a deal could include the lifting of
economic sanctions and ramping up of Iranian oil production
by about one million barrels per day, apart from unleashingthe 200 million barrels Iran has currently in storage.
Moreover, OPEC+ fears that US shale producers will raise
production again, particularly at price levels above USD 50
per barrel. For the time being US shale producers have taken
a pause as in 2020 production collapsed, credit dried up andbankruptcies surged. Rigs in operation fell to a low of 172 inAugust 2020 and have only gradually rebounded, to 373 inJune. Surviving firms are recovering from the shock under
the shelter of higher prices, reconsidering business models
and returning cash to investors in an attempt to regain
confidence. Production is only slowly increasing, also
constrained by environmental policies of the Biden
administration.

Record metal prices to level off
With manufacturing rebounding again, the demand formetals, in particular steel, iron ore and copper has risen.
However, this surge has remained broadly unmet by supply,
which usually takes a long time to adjust. In addition,transport prices have increased due to social distancing andhigher shipping cost, as well as disruptions in supply chains.
As a result, metal prices have increased to levels not seen
over the past decade. That said, prices are expected to level
off in 2021-2022 as transport costs decline, while supply anddemand developments will also contribute.
Supply-side constraints will start to diminish. Copper mining
will improve towards the end of this year and in 2022, as theimpact of production disruptions in Chile lessens. China’s
steel production will ease as the government seeks to cut
emissions, although some uncertainty remains. However,outside China, in the US and the EU, production is expected
to rise. Moreover, there is still unused spare capacity in Asia
that can be absorbed. Iron ore production increase willremain somewhat uncertain. In Brazil, closed mines havereopened, with ambitions of a significant boost in
production, but the restarting of mines is subject to legal
hurdles. Australia has driven up production, alleviating
demand from China, but political tensions between the twocountries could hamper further growth. Meanwhile, pressure
from the demand side on prices is expected to soften, as therecovery turns towards service growth. Moreover, with steel
production from China more constrained, the demand foriron ore will also weaken somewhat. In contrast, copper
long-term price support stems from increased electrificationand decarbonisation.
1.14 Metal prices have increased

1.13 Steep oil price recovery from deep slump

Against this background it is no surprise OPEC+ has
struggled to agree on an extension of their production
quotas, and in early July a meeting was abandoned due to a
row between the UAE and Saudi Arabia. However, end of
July the cartel finally agreed to increase production by
400,000 barrels per day every month, as of August. The
agreement will last until the end of 2022 and provides
support for oil prices and reduces uncertainty.

Inflation rise unlikely to persist
One of the key assumptions underlying our forecast is that
inflation will not remain persistently high. Currently this is a
hotly debated issue in economic policy and academic circles.
Lawrence Summers, former Secretary of Treasury andprofessor at Harvard, has argued that inflation, besides
overheating, is the primary risk in an environment where

Atradius Economic Outlook – August 2021 | 10

money is ample and demand is accelerating.11 Higher
inflation could trigger premature monetary tightening by theFederal Reserve, hampering or even derailing the recovery
in the US. Others, such as Nobel laureate Paul Krugman are
more sanguine,12 pointing that more is needed than what isobserved in the current economic environment, where longterm inflationary forces are currently lacking.
1.15 Inflation spikes in 2021

Percent

1.16 Wage growth remains muted

Wage growth

In any case, inflation is rising. In the US, the June year-onyear figure stood at 5.5%, in the UK at 2.5% and in the
eurozone at 1.9%.13 These are numbers not seen for quite
some time. In our view, in line with the opinion of Paul
Krugman and quite a few observers, this surge is not going tolast. In fact, we expect inflation to spike in 2021 and to revert
to more normal levels in 2022.
We have a number of reasons for this view. Firstly, while theoil price has risen significantly, feeding into higher inflation,
we think this is not sustainable. As we argue in the section
above, countries within and outside OPEC will put pressure
on production to be ramped up, driving prices lower.
Secondly, service prices will remain only temporarily
elevated. The quicker than initially anticipated reopening of
the economy has unleashed demand. Especially the service
sector, in particular restaurants, hotels and leisure, andtourism will benefit from the spending mood of consumers
by raising prices. In that way service businesses at least
partly compensate for lost revenues during lockdowns.

However, this is a one-off opportunity for the service sector,
which is unlikely to be repeated in the next year and a half.
Thirdly, supply bottlenecks will abate. Currently the
manufacturing sector is still facing supply chain bottlenecks,
as goods needed in the production process, or just tradeable
goods, take longer for delivery and are more expensive.
Delivery security concerns have also triggered the switch of
suppliers and higher costs. However, those bottlenecks, will
dissipate over time, taking off pressure on prices and thus
inflation.
At a more fundamental level, there are also no reasons tofear a persistently higher inflation. This is essentially theargument of Krugman. True, globalisation has slowed, andwith it opportunities for cost-savings. The wave oftechnological innovation, leading to online shopping andmore price transparency could fade as well. But demographic
factors, in particular ageing, are still at work, raising savingsand putting pressure on aggregate demand and prices.
Overall it can be said that fundamental deflationary factors
have only weakened, not disappeared. A return to an
inflationary environment seen in the late 1970s or early
1980s is far away.
While more fundamental factors are at work, we are awarethat inflation always remains a threat. In this context wewould like to highlight that inflation expectations are wellanchored by Fed and ECB credibility.14 The recent moves bythese institutions to take a more flexible approach to the
inflation target helps as well (see section below). Surprises indata will not immediately translate in monetary policy
actions. Finally we do not see a movement in wages,
reflecting in higher inflation expectations. This view may be
a bit surprising, given anecdotal evidence of bottlenecks insome parts of the labour market (e.g. the reopening service
sector). However, it is important to note that there are stillseven million people less active in the US labour market. In
the eurozone massive government support has prevented alarge increase in unemployment. Upcoming withdrawal of
support will generate supply of labour, putting downward
pressure on wages.

Monetary policy expansionary
and flexible
During the past six months monetary policy has remained
extremely lax as part of the crisis measures, at least inadvanced economies. With policy rates unchanged at zero oreven below zero and ample asset purchases of USD 120
billion and EUR 80-95 billion per month by the Fed and ECB
respectively, the world remains awash with cheap money.
Over the next year and half, this is expected to last, given theassumption that the current inflation spike proves to betransitory.

11

13

12

14

See http://larrysummers.com/2021/05/24/the-inflation-risk-is-real/
See https://www.bloomberg.com/news/articles/2021-03-18/krugmandismisses-1970s-style-inflation-risk-with-faith-in-fed

11 | Atradius Economic Outlook – August 2021

In emerging economies inflation is going up as well.
If these start to move, an inflation regime shift may be on its way.

However, for some emerging economies the situation isslightly more complicated. With lower vaccination rates therecovery is slower, and so are inflationary pressures. Those
countries have a different source of potential inflation,
namely currency depreciation, which can also weaken theirfinancial market access (if large amounts of foreign debts are
USD-denominated). Higher commodity prices have also
pushed up inflation expectations. Therefore, it comes as no
surprise that we have seen some tightening, particularly in
Brazil and Russia. Other countries may follow, at least if oneof the factors start to play a prominent role.15 However,significant tightening is not expected.
1.17 Asset purchases Fed and ECB continue

1.18 No movement in policy rates

discussion about when the discussion is to start.16 It is
supposed to begin, formally, during the Fed September 2021
meeting, with an expected roll back of the Fed’s asset
purchasing programme in 2022. This is to be followed byrate hikes in 2023. While the Fed is taking extreme care withthese flagship Covid-19 support programmes, others have
gradually expired. 17
The ECB monetary policy framework revision wasannounced in early July 2021, as part of a strategy review
that also incorporated climate change impacts in its
modelling, as well as potential asset purchases. While theselatter elements were not part of the Fed’s September review,the flexibility that the ECB allows its policymakers with
monetary policy setting looks very similar. The inflation
target of 2% remains, it can be allowed to deviate fromdownwards and, most importantly, upwards. The latter isrightly stressed as, with the recovery having set off in the
eurozone, expectations that the asset purchasing programme
as well as the ultralow to negative policy rates will be‘tapered’ should be well managed. For the moment the ECB
looks safe, as inflation is not expected to surpass the 2% level
over the forecast horizon. This does not mean that there will
be no changes in the monetary policy stance as the recovery
gains momentum. Still, the ECB stance is set to remain
extremely loose. The EUR 1.85 trillion Pandemic Emergency
Programme is to remain in place until at least March 2022,with reinvestments of the expiring assets to continue until
end of 2023. No rate hike can be expected before that date.
1.19 Stock market indices leap up further

Meanwhile the Fed and ECB have reformulated their policy
frameworks in order to make them more flexible as well, inparticular to allow for more room to manoeuvre if inflationand the economic cycle are not aligned. The Fed did this in
September last year, which suited well when inflation
started to rise this spring. It relieved tightening expectations
by financial markets and arguably a lot of unrest in what
could have been considered premature tightening.
Nevertheless, as inflation went up, the discussion abouttightening monetary policy has started, or at least the15

Turkey raised its policy rate by 7 percentage points this year. This was
related to credibility issues based on Turkish unorthodox economic policy
making, including continuous demand for low interest rates. This threatened
the lira stability.
16
The Fed is walking a tight rope here with the so-called ‘Taper Tantrum’ of2013 in mind. When Fed chair Ben Bernanke announced that the Fed would
start tapering it expansionary monetary policy, it caused a fierce reaction in
global financial markets. There was a flight to US financial assets,accompanied by currencies’ depreciations in emerging economies andpremature tightening around the world.
17
These contain direct lending facilities to large, small and medium sized
firms, facilities to keep credit markets functioning and incentives for banks to
keep on lending. Only a minor part of the Main Street Lending Programmethat the Trump administration ended in its final day was extended and has
meanwhile expired as well. With the economic recovery having set off during
Q2, these programmes were allowed to expire.

Atradius Economic Outlook – August 2021 | 12

1.20 Emerging economies’ currencies broadly stable

One can conclude that the Fed and ECB policy will remain
expansionary for the time being. Why this is needed so
much? Firstly, it is a precondition for fiscal policy support. It
allows central banks to purchase government bonds,
providing cheap and smooth finance for government supportof the economy, or at least it prevents premature fiscal
tightening that would hamper the recovery (see section
below). Secondly, the cheap money has found its way tosome extent to the equity markets, with the S&P 500
breaking new records and the eurozone STOXX index
reaching new heights. Even the emerging markets index isapproaching levels not seen for a long time. These gains havecreated ‘wealth’ effects for consumers, stimulating
consumption (especially in the US). Thirdly, the cheap money
has helped to finance business investments, which are now
picking up as demand recovers. Equity is cheap, and credit isstill relatively easily available. In turn, investments are partof demand, and therefore help shaping the recovery.
Fourthly, emerging economies, which are lagging behind in
the recovery, are allowed to finance government support aswell. While some emerging economies have seen increases
in funding costs, broader finance problems such as credit
crunches have been avoided. This is witnessed by relatively
stable exchange rates.18 For these reasons, we can expect
monetary support to last for a while, although, as therecovery gains traction, it will gradually be wound down.

Firstly, the pandemic has not only hit public health hard.
Despite ample fiscal support, businesses’ balance sheets in
sectors such as travel, hospitality and transport have been
considerably weakened. This is not visible (yet) in corporate
insolvencies figures, which continue to decline,19 but
research of several central banks´ on the viability ofbusinesses strongly suggests that the number of companies
in a weak financial state has risen.20 Inevitably, corporate
insolvencies will start to increase in the course of 2021 asgovernment support is lifted. This is a natural process, as the
economies should be allowed to adjust to the new economic
reality. At the same time, mass insolvencies should be
avoided, as this would (partially) reduce the supply side ofthe economy, and subsequently hamper the recovery. Thisrequires continuation of (targeted) support. Secondly, an
important topic is government action to address the impact
of climate change.21 Without significant government
interference the climate goal of the Paris Agreement to limit
global warming by 2 degrees Celsius will not be achieved.
The pandemic has given governments a chance to act.
Indeed, with its NextGeneration EUR 750 billion postpandemic recovery program the EU takes climate change
into account. Joe Biden’s American Jobs Plan of USD 2.3
billion addresses environmental issues as well.
Thirdly, whereas the role of the government in the future
economy will most likely be larger than before thepandemic, it does not mean that restraints are gone as well. It
was only for pandemic emergency support that rules related
to public finance, particularly related to budget deficits anddebt-to-GDP, were suspended. In 2020 this has led toaverage overall budget deficits of almost 12% in advanced
markets and almost 10% in emerging economies. Average
global public debt climbed to 97% of GDP, a surge of 13%
compared to pre-pandemic projections.22 This cannot last, noteven with ample central bank support, and governments will
ultimately have to reign in their spending.
1.21 Budget deficits to decline

Percent

Balancing act for governments
As the recovery gains traction, fiscal support packages are
expected to be wound down as well. In a sense this is anatural way of government behaviour. Governments havepartly stopped the economic live for public health reasons,and affected businesses and households have been
compensated. Now that the public health crisis is more undercontrol, governments are about to expire, or at least to
reduce fiscal support. However, this will be a balancing act
for a number of reasons.

18

Apart from the Turkish Lira, see footnote 19
For example, in Q1 of 2021 US insolvencies were almost 30% lower y-o-y,while in the UK this figure was even 40%. In a number of European countries
we see also declines, although at a decreasing rate, e.g. France’s figure forApril was a y-y 20% decline, while in March it was almost 40%.
19

13 | Atradius Economic Outlook – August 2021

20
See e.g. ECB https://www.ecb.europa.eu/pub/financialstability/fsr/html/ecb.fsr202105~757f727fe4.en.html.
21
Apart from climate change, digitisation and inclusiveness are also major
topics.
22
Figures taken from IMF Fiscal Monitor April 2021.

1.22 Debt ratios stabilise after 2020 hit

wealth effect, whereby savings run up. Monetary policy
would be more expansionary, especially by asset purchases.
This would alleviate the upward pressure on finance costs
that stems from increased risk perception and higher risk
premiums. The inevitably result would be additional
constraints on businesses´ spending. Moreover, financing ofgovernment support would be more expensive as well, andstimulus could no longer be as massive as it was in 2020. In
contrast to our baseline scenario significant supply side
scarring could not be prevented, and corporate bankruptcies
and unemployment would increase. Whereas the recovery in
2021 would be depressed, the 2022 economic performance
would take a major hit. However, for the time being we do
not attach a high likelihood to this scenario.

We assume that governments will be able to act effectively,
to some extent leading the adjustment of the economy (byaddressing climate change) and supporting viable firms
where needed - all under the given constraints of publicfinance´s health. Budget deficits will be reduced, mostprominently in the US, where the 2020 15% of GDP budget
deficit is expected to decrease to about 10% of GDP in 2021
and to 5% of GDP in 2022. Sharply increased public debt to
GDP levels will stabilise rather than being reduced. For thisnormalisation process no underlying fiscal tightening of any
size is needed. It is simply the expiry of the pandemic
support packages and the denominator effect that will do thework. Therefore, we think that governments will be able toreturn to their pre-pandemic public finance healthconditions, be it as unmistakable higher public debt levels.

Table 1.2 Real GDP growth (%) - two scenarios
BaselineEurozone
United States
Emerging Asia
Latin America
Eastern Europe
World

Limited vaccine effectiveness

2020

2021

2022

2020

2021

2022

-6.7
-3.5
-0.1
-6.8
-2.2
-3.6

5.0
7.0
7.7
6.5
5.1
6.2

4.6
4.3
6.0
2.9
3.8
4.7

-6.7
-3.5
-0.1
-6.8
-2.2
-3.6

3.0
4.7
5.2
5.7
3.0
4.5

1.2
0.4
2.9
1.2
1.6
1.8

Sources: Oxford Economics, Atradius

Downside scenario: virus
variants dominate vaccines
In this chapter we have presented our baseline scenario forthe global economy – the one we consider the most likely.23
However, other scenarios cannot be ruled out. On the upside,
the consumer-led recovery that we currently envisage could
turn into a consumer boom. This implies that a lot more of
the involuntary savings accumulated during the lockdown
period will be spent than in the baseline scenario, triggeringa virtuous cycle of higher consumption, investment andsentiment. Such a scenario also assumes that the grips thatgovernments are currently getting on the pandemic turn into
control.
The downside scenario assumes that such control does notoccur, due to inadequate effectiveness of vaccinations
against virus variants like Delta. This would force
governments to re-impose restrictions in Q3 of 2021, evenmore forcefully than over the past year, lasting in 20212022. In terms of public health the situation would remind of
spring 2020 to some extent. Consumption would deteriorate
again, and instead of an upside scenario´s virtuous cycle ofconsumption, investment and sentiment, the cycle would
turn vicious, dragging the global economy downward. Equity
markets would take a significant hit, creating a negative
23

We build our views on scenarios provided by Oxford Economics.

Atradius Economic Outlook – August 2021 | 14

2. Developments in major economies
Advanced economies reaching
pre-crisis levels
The economic rebound in advanced economies has gatheredpace in H1 of 2021, and is currently expected to surpass precrisis activity levels this year. Historically, large fiscal relief
bills across major markets have protected those economies
from deeper recessions, and have facilitated a smootherrecovery. However, Covid-19 continues to pose a threat to therebound, in particular as new variants like the moretransmissible Delta variant lead to increasing infections anduncertainty. As long as the situation can be controlled andwithout the need for additional strict national lockdowns,
advanced markets are forecast to expand 5.8% in 2021 and4.2% in 2022.
Table 2.1 Real GDP growth (%) - advanced markets
Eurozone

2020

2021f

2022f

-6.7

5.0

4.6

United States

-3.5

7.0

4.3

United Kingdom

-9.8

7.3

6.7

Japan

-4.7

2.6

2.8

-4.6

5.8

4.2

Advanced economies

Sources: Oxford Economics, Atradius

Eurozone
Despite the ongoing vaccination campaign, the eurozone isstill struggling with the Covid-19 virus. Infections have flaredup again across Europe, due to the spread of the Delta variant(Figure 2.1). We expect a GDP growth of 5.0% in 2021 and of
4.6% in 2022 after a sharp 6.7% contraction last year (thehighest slump among major advanced markets, apart fromthe United Kingdom).

Table 2.2 Real GDP growth (%) - eurozone
2020

2021f

2022f

Austria

-6.4

3.6

4.7

Belgium

-6.3

5.4

3.7

France

-8.0

6.0

4.8

Germany

-5.1

3.6

4.6

Greece

-7.8

5.7

5.9

Ireland

5.9

7.1

2.4

Italy

-8.9

5.5

4.8

Netherlands

-3.8

3.0

3.4

Portugal

-7.6

4.3

5.4

Spain

-10.8

6.6

6.1

Eurozone

-6.7

5.0

4.6

Sources: Oxford Economics, Atradius

Latest data shows that Eurozone GDP went up by 2.0%
quarter-on-quarter in Q2 of 2021, following on a -0.3%
contraction in Q1. As the vaccination rollout continues, morecontainment measures are likely to be lifted in the coming
months. Economic activity is expected to accelerate in thesecond half of 2021, as containment measures are further
lifted. Surveys indicate a strong recovery in services activity,
as high-contact activities are normalised. The composite
Purchasing Managers Index (PMI) recorded a value of 60.2 in
July, up from 59.5 in June. Sentiment is above the neutrallevel both in sub-indicators for manufacturing and services.
Manufacturing PMI declined slightly in July, to 62.8, from its
highest ever recorded level in the month before (63.4). The
manufacturing industry is experiencing some supply-side
challenges, however, as input lead times lengthened to one of
the greatest degrees ever recorded in July.
All member states are expected to see their GDP having
returned to pre-pandemic levels by the end of 2022, but thepace of recovery is highly uneven. Among the larger
countries Germany and the Netherlands will see the gap
closed by Q3 of 2021, while Spain and Italy will do so one
year later, in Q3 of 2022. The sectoral composition ofcountries in Southern Europe is more vulnerable due to astronger reliance on tourism, which remains affected bypandemic-related restrictions in 2021.
Downside risks to the baseline projections relate mainly tothe future course of the pandemic. We see a rapid spread of
the Delta variant among the younger, unvaccinatedpopulation in many European countries. That said,
hospitalisations are declining in most countries, which iswhy many (but not all) countries are loosening containment
measures. A number of countries, including Portugal, Spain,

15 | Atradius Economic Outlook – August 2021

Italy and the Netherlands have tightened measures in recent
weeks, as cases are rising again.
2.1 New Covid-19 cases per day

half of 2020, unemployment has decreased again sinceAugust 2020, and is currently at 7.7% (June 2021). Workers
covered by job retention schemes were estimated to accountfor about 6% of the labour force in March 2021, down fromalmost 20% in April 2020. We expect the unemployment rate
to remain broadly stable during the rest of the year. We do
not expect an acceleration of wage growth in 2021, as there is
still a high slack in the labour market.

Higher energy prices and supply bottlenecks push
up inflation

Exports improve on higher external demand
Caused by the pandemic there was a sudden drop in world
trade in 2020, due to supply-constraints, border closures andmobility restrictions. This triggered a sharp contraction ofeurozone exports by 9.6% last year. The global economy
entered 2021 on a weak footing, as a resurgence in new
infections led governments to tighten containment
measures. At the current juncture, survey data signals strong
momentum in global activity. Foreign demand has beenrevised upwards since our February Economic Outlook, due
to stronger than projected demand from the United States
and the United Kingdom. Eurozone export growth slowed in
Q1 of 2021 (up 1.0% quarter-on-quarter), due to disruptions
caused by Brexit and shipping and input-related constraints.
However, in H2 of 2021 we expect a strong rebound inexports and tourism. The growth rate in the export-oriented
manufacturing sector is robust, although there are someheadwinds created by supply constraints. Overall, we expect
an average export growth of goods and services of 9.1% in
2021, followed by a 6.1% increase in 2022.

In 2021 a combination of factors is set to push inflation well
above last year’s rates. The eurozone inflation rate rose to 2%
in May, the highest level since late 2018, and remained highin June (1.9%). Energy inflation (12.5%) is the driver, withother components (non-energy industrial goods, services
and food) making only a small contribution. Inflation is
likely to increase further towards autumn, mainly reflecting
the reversal of a temporary VAT cut in Germany. Risingdemand and disruptions in value chains could lead to aslightly higher pass-through of rising production costs to
consumer prices in some sectors. Higher inflation is visible
in producer prices in the industrial sector. Increases in sales
prices are broad-based, but are particularly strong forintermediate goods, mainly for manufacturing of wood,
paper, rubber, plastic products, and basic metals. The latest
manufacturing PMI is also pointing to increasing delivery
times and a rise in purchasing and selling prices.
2.2 Increases in producer prices

Consumption picks up on reopening of economies
The lockdown measures heavily disrupted private
consumption 2020, which shrank by 8.0% on an annual
basis. In Q1 of 2021 household consumption declined by 2.3%
on a quarterly basis, as confinement measures became more
stringent following a rise in Covid-19 cases. However, thesteep increase in mobility observed since April 2021
indicates a strong rebound in private consumption as of Q2
of 2021. We expect private consumption to increase 3.6%
year-on-year in 2021. In 2022 we forecast a 7.1% growth rate
as the labour market recovers further, and due to a positive
spill-over effect from consumption growth this year.
The pandemic had a severe impact on the eurozone labour
market, with a cumulative of 4.7 million jobs lost in the firsthalf of 2020. Furlough schemes that were put in place
prevented a steeper rise in unemployment. As the economies
partly reopened and fiscal stimulus packages were put inplace, employment growth turned positive again (up 2.0
million) in H2 of 2020 and Q1 of 2021. After rising in the first

Despite the price pressures in some parts of the production
chain, we think that inflation will likely remain subdued, inpart reflecting low wage pressures, the context of still
significant economic slack, and the appreciation of the euro
exchange rate. Growth in negotiated wages weakened
substantially in Q1 of 2021, which could reflect a delayed
effect of Covid-19 on the labour market. Compensation perhour as an indicator of actual wage growth continues to berather strong, but this is mainly an effect of job retention andtemporary lay-off schemes (which reduces employment, but
pushes up pay per hour for those who remain in theworkforce). We expect an average inflation rate of 2.1% in
2021, followed by a slowdown to 1.4% in 2022, given weakunderlying price pressures.

Atradius Economic Outlook – August 2021 | 16

Fiscal support extended in 2021
Due to the strong fiscal response during the pandemic thebudget deficit in the eurozone increased strongly, to 7.4% of
GDP in 2020, from 0.6% in 2019. As new waves of thepandemic have hit eurozone countries, in 2021 many
emergency measures have been extended, and additional
recovery support has been put in place. As a result, weforesee only a marginal improvement in budget deficits thisyear, to 6.9% of GDP for the eurozone in total. Fiscal
tightening is expected to take place in 2022, bringing the
eurozone budget deficit down to 4.1% of GDP, as the
pandemic abates and temporary support measures arephased out. Due to the stimulus measures eurozone
government debt rose to almost 100% of GDP in 2021, andwill remain close to this level in 2022.
As a complement to national fiscal measures, the EUR 750
billion NextGenerationEU (NGEU) package will also play arole. The NGEU package will provide an additional stimulusof around 0.5% annually between 2021 and 2023. All
member states, except The Netherlands and Latvia, havesubmitted their recovery plans to the European Commission
so far. The European Commission wants to allocate at least
50% of the funds to a greener economy and digitalisation.
Allocation of the fund is subject to obligations of member
states to reform and to green their economies, in line withcountry-specific recommendations identified in theEuropean budgetary plans.

Monetary support remains loose
The European Central Bank (ECB) will keep monetary policy
accommodative over the coming years. In Chapter 1 wealready discussed the strategic review that the ECB
conducted, resulting in a “symmetric” inflation target of 2%,
rather than a target of “close to, but below 2%”. Furthermore,
we covered the Pandemic Emergency Purchase Programme(PEPP), which leads to the purchase of 1.85 trillion of bonds.
ECB asset holdings have been rapidly increasing since thestart of the pandemic. In total, 30% of all eurozone public
debt issued by the central governments is held on ECB
balance sheet. Financing conditions remain loose as well.

Sovereign yields spiked at the start of the pandemic, but
declined rapidly after the ECB launched the PEPP.
Favourable financing conditions allow countries to take up
more debt in order to tackle the Covid crisis. Given the size of
eurozone debt (100% of GDP), it is important for thesustainability of public finances that financing conditions
remain affordable. For countries with higher-than-averagedebt ratios, in particular Italy, France, Spain and Portugal,
this is even more important. Sustainability is supported by
the fact that government debt is relatively long-term
financed. Interest rate increases will not immediately raiseborrowing costs substantially. Banks also continue to benefit
from favourable funding conditions, driven by the asset
purchasing programmes. Many banks have also replacedsome market-based functions with targeted longer-term
refinancing operations (TLTROs) at very favourable
conditions.

US recovery passes its peak
The US economic outlook has strengthened markedly since
our February Economic Outlook. The vaccination rollout hasgathered pace, and the economy reopened in the first half ofthe year, which, combined with very low 2020 base effects,
brought the recovery to its peak. The additional USD 1.9
trillion fiscal stimulus package approved by Congress inspring has provided an additional contribution. US GDP iscurrently forecast to expand 7.0% this year compared to 4.2%
predicted six months ago – the highest annual expansion
since 1984.
2.4 Consumer is king

2.3 ECB holdings of public debt, nominal euro’s
3500
3000
2500
2000
1500
1000
500
0

Public debt, not held by ECB

Purchased by ECB
Source: Atradius

The economy grew 6.5% y-o-y in Q2 of 2021, undershooting
expectations, but surpassing pre-crisis levels. Supply chain
issues have limited the capacity for inventories to restock inorder to meet the strong domestic demand. Robust domestic
demand also contributed to stronger import growth thanexports, exerting a drag on overall GDP growth. Private
consumption continues to drive the US economic recovery,
and is expected to do so in the remainder of 2021 and in
2022.
The fiscal stimulus has included generous outlays toindividuals, and optimism has been rising as healthconditions have improved. Under lockdown and pandemic
uncertainty in 2020, the personal savings rate rose to a

17 | Atradius Economic Outlook – August 2021

record high of 16.2%, offering more disposable income to be
spent on pent-up demand in 2021 and 2022. The Federal
Reserve estimates that USD 2.6 trillion in excess liquidsavings by households have accumulated during the
pandemic. Rising consumer optimism is further
underpinned by the strengthening labour market.
Unemployment stood at 5.9% in June 2021, down from apeak of 14.8% in April 2020. Labour supply constraints arealso pushing wage growth higher, up 3.6% compared to2020. The labour force participation rate remains relatively
low at 61.6% (last seen in the late 1970s), putting further
upward pressure on wages.
While the labour market is gathering momentum and wages
tick up, pushing up prices, the Federal Reserve is notexpected to respond with monetary tightening in the shortterm. As discussed in Chapter 1, we expect the inflation surge
to be temporary, and the Fed does not yet consider the
improvements in the labour market to offer confidence in a
“broad and inclusive” recovery. As general health conditions
continue to improve more workers will feel comfortable
returning to the labour force, helping to meet theaccelerating jobs growth. Increases of Covid-19 cases in somestates increase the risk that this recovery will be bumpy
though. Labour supply will continue to increase as childcare
becomes more readily available, and as emergency
unemployment benefits expire. As supply increases meetdemand, the upward pressure on wages will ease.
Inflation expectations remain well-anchored, underpinned
by Fed policy credibility. A key risk for price growth iseconomy overheating due to aggressive fiscal stimulus, butthat risk is also decreasing. The fiscal impulse from theAmerican Rescue Plan will fade quickly in 2022, and any
additional stimulus from the American Jobs Plan will be
disbursed more slowly. This should ease upward pressure on
prices, and we expect core PCE inflation to average 3.2% thisyear – above target, but contained. As such, the Federal
Reserve is not expected to begin hiking interest rates until
2023, but likely to begin tapering quantitative easing inearly 2022.
The 2022 growth outlook has also improved compared to six
months ago (4.3% compared to 3.4%) with further upside risk
due to the potential USD 1.7 trillion American Jobs Plan
(AJP). The AJP is currently under negotiations. A USD 1.0
trillion infrastructure bill was already passed by the US
Senate in August 2021, with other bills likely to follow later
this autumn. However, Covid-19 continues to pose a risk to
the economic recovery. As the pace of vaccinations rollout
slows and more transmissible variants spread, the economy
could perform less well than we currently anticipate.

UK economic rebound still facing
downside risks
The outlook for the UK is substantially brighter than it was at
the beginning of 2020, but the economy is still not expected
to reach its pre-crisis level before 2022. Activity proved more
resilient than expected during the third national lockdown
and has rebounded strongly since April, as restrictions began

Brexit adds additional pressure to UK-EU trade
International trade has faced significant contraction in thepast year due to the Covid-19 crisis, and UK-EU trade has
been further battered by Brexit. Controlling for pandemicrelated volatility, we calculate that trade between the UK
and EU decreased 15.3% since end-2018. This is compared
to a 7.0% contraction in trade between the UK and the restof the world*. We benchmark against end-2018 as it is thelast period before Brexit deadlines and the pandemic
increased volatility in trade flows. Since 2019 uncertainty
alone contributed to stagnant trade flows, as anticipatedBrexit deadlines came and went. The sharp decrease in2020 – also driven by the pandemic – wiped out nearly all
trade gains made between the UK and the EU since the UK
voted to leave the EU in 2016. While goods are still tradedwith zero tariffs, non-tariff barriers in the form of
increased paperwork and higher regulatory uncertainty
are straining trade. This is especially hampering trade in
the machinery & transport equipment sector, which
accounts for almost half the decline in bilateral trade. On
top of that, rising tensions surrounding the controversial
Northern Ireland protocol have increased uncertainty
further. Therefore, we expect UK-EU trade to recover more
slowly and on a bumpier path than trade with the rest of
the world, as the global economy returns to ‘normal’.

* Latest data is May 2021. For a more in-depth analysis, read “Brexit
Disrupts UK-EU trade”
https://group.atradius.com/publications/economic-research/brexitdisrupts-UK-EU-trade-june-2021.html

to ease. The emergence of the more transmissible Delta
variant of Covid-19 caused a four-week delay in the relaxingof restrictions in June, temporarily slowing momentum andincreasing downside risks. However, the outlook for theremainder of 2021 still remains robust, with annual GDP
forecast to increase 7.3%. In 2022, a 6.7% expansion is
expected.
Consumers are driving the recovery in the UK, with strong
growth in the hospitality sectors. This momentum is
expected to continue, as the last remaining restrictions havebeen lifted. The decline in Covid-19 cases since end-Julybodes well for consumer confidence. Non-consumer-related
sectors are facing slower growth, and the manufacturingsector is constrained by supply chain disruptions.

Atradius Economic Outlook – August 2021 | 18

Government policy is key for the economic recovery and theprevention of deep scars from the pandemic. Governmentsponsored loan schemes have helped to keep corporate
insolvencies low, and job retention schemes prevented amajor rise in unemployment. These programmes are
currently set to expire in autumn, providing the economy
with just a few months to adjust. With stronger householdbalance sheets and rapidly recovering demand for labour, alarge uptick in unemployment or a major consumption
slump is not expected. Monetary policy will also continue tobe supportive, with interest rates flat at 0.1%, and the asset
purchasing programme tapering slowly.

Japan: minimal stimulus from
Tokyo Olympics
Japanese GDP contracted by 4.7% in 2020 due to thepandemic, which depressed household and businessspending and led to contraction of exports. The economy has
recovered since the second half of 2020, but suffered atemporary setback at the beginning of 2021. In January and
April 2021 the Japanese government declared state
emergencies in prefectures with rising infection rates.
However, those measures have been insufficient to stop the
spread of new virus variants. Japan lags behind most otherOECD countries in terms of vaccination, with only about 47%of the population having received at least one dose of
vaccine. Despite rising infections we forecast the economic
recovery to pick up pace in the second half of 2021, leading toa 2.6% GDP growth in 2021, followed by a 2.9% increase in
2022.
Despite a rebound in H2 of 2020 Japanese exports shrank by
12% last year, due to the disruptive effect of Covid-19. Japan
is well-integrated in Asian supply chains, importing raw
materials and inputs from the region, while producing goods
at the high-end of the value chain. Export growth in 2021 isunderpinned by robust Chinese demand, a buoyant
manufacturing sector and large fiscal stimulus in the UnitedStates (the US is the most important export partner ofJapan). However, the car industry is experiencing somepressure from supply chain disruptions.
On the domestic side, recent data suggests that private
consumption was resilient in spring 2021, despite the state of
emergency in Tokyo and several other prefectures. While
improved spending is expected amid progress invaccinations, consumption remains susceptible to healthrelated risks, due to limited medical capacity in order to treat
Covid 19 patients. Since the Tokyo Olympic Games were held
under the state of emergency, its economic benefit for
consumption was fairly limited. Due to extensive fiscal
support during the pandemic, unemployment remains low.
Private investment will improve in 2021 due to stronger
foreign demand, accelerating technological shifts andstructural factors. Investments are supported by Japanesebusinesses, expected to maintain high levels of R&D
investment over the coming years. This mainly accounts forthe automotive industry (developing the next generation
vehicle technology) and digitalizing businesses.

19 | Atradius Economic Outlook – August 2021

Emerging economies
While the global economy is showing a robust recovery in
2021, many emerging market economies (EMEs) lag behind,still struggling with Covid-19 outbreaks. In Asia, thepandemic situation was relatively well under control, until
the Delta variant started to spread in recent months. Latin
America has among the highest infection rates in the world.
Compared to advanced economies, the vaccine rollout has
been progressing more slowly across EMEs. Additionally, thescope for fiscal expansion has been more limited, offering
less support to offset the negative economic impacts ofcontainment measures. A stronger rebound is likely in thesecond half of 2021 with the gradual easing of domestic
restrictions, in line with improving global conditions.
Economic growth across EMEs is forecast to recover by 6.9%
this year, followed by another 5.3% growth in 2022.
Table 2.3 Real GDP growth (%) - emerging markets
2020

2021f

2022f

Emerging Asia

-0.1

7.7

6.0

Latin America

-6.8

6.5

2.9

Eastern Europe

-2.2

5.1

3.8

MENA

-4.8

3.9

4.1

Sub-Saharan Africa

-2.7

3.8

3.8

Emerging Markets

-1.6

6.9

5.3

Sources: Oxford Economics, Atradius

Asia: China and India
The Chinese economy continues its fast recovery from thepandemic, helped by a strong containment effort and swift
policy actions to mitigate the impact of the crisis. China’s
approach to tackle Covid-19 has been to impose stringent
containment measures in areas where the virus surfaces.
Regarding vaccinations the country lags behind most major
economies. This means that China remains vulnerable tosporadic emergence of clusters. Assuming a persisting
suppression of the pandemic, we forecast growth to reach
8.4% this year. This will be followed by a 6.1% expansion in
2022 as base effects dissipate, and the economy returns to
pre-Covid-19 trend growth.
In 2021, we expect household spending and corporate
investment to overtake real estate and infrastructure as
growth drivers. Consumption growth will probably gain pacein 2021, as consumers become more comfortable with theirown economic situation and public health conditions. Macropolicy will keep underpinning manufacturing investment
and will shift away from real estate and infrastructure
spending. Shipping bottlenecks in Guangdong and a rotationof global demand away from goods to services will impact
China’s export growth. However, we do expect a recovery ofexport growth in the remainder of 2021, as a number ofsupply chain issues and shipment delays will be resolved.
We expect monetary policy to turn more neutral as therecovery gains momentum. Monetary policy support during

the Covid-19 pandemic has been leaning towards noninterest rate instruments, with the benchmark interest rateunchanged for roughly a year. Tightening measures wereintroduced in the property market to avoid inflating bubbles,
which were already emerging. Fiscal policy will provide lesssupport than in 2020 as the recovery is solid in most sectors.
However, some support measures will remain in place. For
instance, debt moratoria are being extended on a case-bycase basis, and businesses hit by the crisis can continue tocarry over losses for eight years altogether. The hardest-hit
companies will also remain eligible for lower social security
contributions. That said, the pandemic situation remains animportant downside risk for the Chinese economy. In theabsence of mass vaccinations, a full reopening of the borders
and return of passenger traffic is still prevented.
In India economic growth is projected to bounce back in
2021, to 9.1%, after 7.0% contraction in 2020. The recovery isalmost entirely attributable to the low base of 2020. In 2022,
we expect a GDP expansion of 7.1%.
An upsurge of Covid-19 infections since February is
weakening the recovery. Infections rose rapidly between
January and early-May, bringing new cases per day toaround 400,000 at the height of the second wave.
Vaccination rollout is progressing slowly. The targeted
lockdown approach, less stringent restrictions, and resilient
consumer and business behaviour will probably mitigate theeconomic impact of the second wave. Government efforts toboost vaccination rates and forbearance measures from thecentral bank to alleviate the effects of the second wave on
individuals and small businesses will enable the recovery toresume in the second half of the year. Growth will also be
supported by the government’s expenditure push initiatedalready before the second wave. However, compared to othermajor economies the extent of direct government support islimited (amounting to 3.5% of GDP). The Reserve Bank ofIndia (RBI) has signalled its intention of maintaining anaccommodative stance as long as necessary. Given risks
surrounding the pace of the recovery, the RBI is projected todelay any rate increase until mid-2022.

Latin America: Brazil and Mexico
After a sharp 6.8% contraction in 2020, Latin America’s GDP
is forecast to increase 6.5% in 2021. Together the larger
countries Mexico, Brazil and Argentina have recorded 27
million Covid-19 cases, about 14% of global cases (whileaccounting for 5% of the world population). Compared to thesize of the population, Uruguay, Argentina, Panama,
Colombia and Brazil are among the countries with thehighest infection rates in the world. The vaccination rollout
has been slower than in most advanced markets, with the
exception of Uruguay and Chile.
In Brazil, a third wave of infections emerged in March andApril, pushing the death toll to its highest since the pandemic
began. However, the vaccination rollout is picking up pace,with 53% of the population at least partially vaccinated. Thisis still lower than in some other Latin American countries,
and it is not what was expected, given the country’s vast

experience with infectious diseases. But a lack ofprioritisation from President Bolsonaro led to vaccine supply
shortages, keeping Brazil on par with other EMEs. Brazil’s
economy performed relatively well in 2020, recording acontraction of 4.4%, less than in neighbouring countries. Thiswas due to a relatively diversified economy, with a lower
share of informality in the labour market and more
possibilities to work remotely. Additionally, the government
provided a sizable fiscal package (12% of GDP) to contain theeconomic damage; it even succeeded to reduce poverty rates
last year.
GDP is forecast to expand by 5.7% in 2021, followed by a 2.1%
growth in 2022. Despite a third wave of infections the
economy performed well in H1 of 2021, thanks to a positive
spill-over effect from last year and strong domestic demand.
In H2 of 2021 we expect growth to continue, led byhousehold consumption and exports, on the back of a more
effective vaccination rollout and improvements incontrolling the virus. Amid recovering global demand,
exporters benefit from the depreciation of the Brazilian real
and low domestic wage growth, which provide Brazilian
exporters a competitive edge. Room for additional fiscal
support in 2021 is limited, as public debt approaches 90% of
GDP. It will be a challenge to strike the right balance between
protecting the poor and ensuring sustainable public finances.
Additionally, rising inflation (8.3% y-o-y in June) has
resulted in a more restrictive monetary policy. The central
bank has increased the policy rate by a cumulative 325 basis
points since the beginning of 2021.
In Mexico, Covid-19 cases have been picking up again since
mid-May, as the more infectious Delta variant is becoming
dominant among non-vaccinated younger people. Mexico
will benefit from the strong US recovery, which will fueldemand for Mexican exports and tourism expenditure in the
country. Private consumption will strengthen gradually,
aided by remittances and the rollout of vaccines. However,the AMLO (Andrés Manuel López Obrador) government
continues to promote a business unfriendly economic policy
agenda, which is leading to uncertainty among investors anddeclining fixed investment. During the pandemic fiscal
support was meagre, amounting to just 1% of GDP in 2020.
Monetary policy is less loose than in other major emerging
markets. However, strong external demand will help therecovery, and GDP is expected to return to its pre-pandemic
level by early 2022. Overall, we expect a 6.2% GDP reboundin 2021, followed by a 3.2% growth rate in 2022.

Eastern Europe: Russia and Turkey
Eastern Europe is likely to see a 5.1% GDP expansion in 2021,
after a 2.2% decline in 2020. Russia went through arelatively mild recession last year, as restrictions wereshorter and less severe than in most other countries. Russia’s
economy is expected to expand 2.5% this year, supported bya strong rebound in global demand and a domestic V-shaped
recovery. Reduced geopolitical tensions and risingcommodity prices have also improved sentiment. Despite an
acceleration in vaccinations in recent weeks, only 26% of the
Atradius Economic Outlook – August 2021 | 20

population is at least partially vaccinated. Covid-19
infections in Russia have been increasing since May, buthave also triggered a more aggressive vaccination campaign.
This should help to avoid confinement measures that would
curb activity again. Private consumption is expected to be
the main growth driver in 2021, although this will be more ofa mechanical rebound. Household finances still remain
stretched, and we expect household consumption to return topre-pandemic levels not until 2022. Investment will grow in
2021, but remains constrained by the OPEC+ deal, as oil
output curbs are set to remain in place until April 2022 atleast, which will constrain growth in oil revenues. Fiscal
support in 2020 was relatively limited compared to most
European markets. In 2021 the government will roll backsupport, as it emphasises preserving fiscal buffers against
external shocks. Rising inflation prompted the central bankto reverse its monetary easing cycle, and to raise rates threetimes since March 2021. Inflation is expected to remain
elevated in summer 2021, before it will decline due tomonetary policy tightening and base effects.
Turkey was one of the few countries to avoid a recession in
2020, with a GDP growth of 1.8%. In Q1 of 2021, GDP
expanded by 7% year-on-year. Following a third wave of
infections, restrictions were tightened once again in lateMarch 2021, and another full lockdown was announced inlate-April 2021, extending into May. The vaccination rollout
has been ongoing since February and has accelerated
recently. The lifting of restrictions since mid-May has led to astrong rebound in economic activity. The surge of mobility inJune suggests a rapid recovery in consumption andinvestment in the later part of Q2. Industry has been
exempted from the lockdown measures, and will remain
supported by domestic resilience and the global trade
upswing. Tourism is expected to improve over the coming
months, but the wildfires that broke out in southern andwestern parts of the country could negatively impact the
number of visitors. Germany and Russia, two key sources ofvisitors, have lifted restrictions on travel to Turkey.
Exchange rate pressure and high inflation make it unlikelythat Turkey will sustain the recent pace of growth during therest of the year. According to official data, inflation jumped to17.5% in June, up from 16.6% in May. Underlying
developments in producer prices (up 43% y-o-y), core
inflation (up 17.5%) and inflation expectations (up 15.6%)
indicate that high inflation will not be easy to overcome. In
the second half of 2020 there was aggressive monetary
policy tightening in order to prevent the self-induced credit
surge from spinning out of control. However, in May 2021
President Erdogan (once again) replaced the central bankgovernor by someone with a more ‘dovish’ (adverse to highinterest rates) stance. This underscores existing concerns
about the independence of the Turkish central bank and

21 | Atradius Economic Outlook – August 2021

poses a risk to financial stability. The current central bankgovernor has kept the interest rate steady at 19%, but the
replacement did trigger renewed pressure on the exchange
rate, wiping out all of the lira’s gains under the previous
governor. Additionally, the macroeconomic policy mix totackle the pandemic is based on concessional loans rather
than on direct fiscal support to households and firms.

Sub-Saharan Africa: South Africa
The pandemic continues to take a heavy toll on Sub-SaharanAfrica. Following the largest economic contraction ever forthe region (down 2.7% in 2020), growth is expected torebound by 3.8% in 2021, significantly lower than anticipated
before the pandemic. South Africa entered a third wave of
Covid-19 infections in the first half of 2021, triggering arenewed lockdown since late-June. Vaccination rollout isonly slowly progressing, with about 12% of the population
having received at least one dose. However, an economic
growth rate of 4.3% is expected in 2021, followed by a 2.3%
increase in 2022. Support is coming from improved domestic
and external demand. South Africa benefits from the global
economic recovery and higher commodity prices. However,the spread of the pandemic, in combination with slow
vaccination rollout remains a risk for the economic outlook.
Additionally, riots in certain parts of the country, triggeredby the jailing of former president Jacob Zuma, pose anotherdownside risk for South Africa.
Inflation was 5.1% in June, broadly stable compared to May(5.2%), with still upward pressure from higher oil prices andan increase in electricity tariffs. The South African rand
initially gained value in 2020, but lost much of it again due
to the recent riots. Some support could still be provided byhigher commodity prices. Fiscal support to tackle thepandemic amounts to about 6% of GDP, and has been partly
extended into 2021. As a result, public debt will rise sharply,to 83% of GDP in this year, with limited additional room tosupport the economy. Monetary policy is expected to remain
accommodative in 2021.

Appendix: forecast tables
Table A1: Macroeconomic headline figures - developed markets
GDP growth
Inflation
Budget balance(% change p.a.) (% change p.a.)(% of GDP)Grossgovernment
debt (% of GDP)

Current
account(% of GDP)

Export growth Private cons.
(% change p.a.) (% change p.a.)

Fixed
Government
Retail sales Industrial prod.
investment
consumption(% change p.a.) (% change p.a.)(% change p.a.) (% change p.a.)2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022
Australia

-2.4

5.1

3.3

0.9

2.1

2.0

-10.0

-3.4

-4.6

64.9

61.6

65.2

2.6

3.3

0.8

-10.0

2.0

8.1

-5.8

6.4

3.4

-3.0

9.7

6.0

7.2

3.8

2.5

2.5

4.3

0.1

-1.0

1.3

2.2

Austria

-6.4

3.6

4.7

1.4

2.3

1.5

-8.8

-8.8

-4.5

142.5 142.4

138.2

2.4

0.8

3.0

-10.6

4.7

9.0

-9.1

4.0

7.4

-5.6

5.8

3.5

2.3

2.3

0.4

-0.5

4.4

1.9

-6.0

8.0

3.3

Belgium

-6.3

5.4

3.7

0.7

1.7

1.3

-9.3

-6.5

-4.5

143.4 140.0

138.3

-0.1

0.4

-1.7

-4.6

8.1

5.4

-8.7

3.6

7.5

-6.9

9.8

1.6

0.6

3.1

1.5

2.0

7.3

2.4

-3.8

5.9

2.0

Canada

-5.3

6.8

3.9

0.7

2.7

2.5

-10.5

-6.2

-2.3

127.3

119.2

115.0

-1.8

0.0

-0.3

-10.0

5.6

8.6

-5.9

6.1

6.2

-3.7

9.1

3.0

-0.3

5.8

0.3

-2.1

11.2

6.2

-8.3

6.9

4.8

Denmark

-2.1

3.1

3.3

0.4

1.5

1.2

-1.2

-1.4

-0.5

58.5

57.7

55.6

8.3

7.0

7.0

-7.0

7.4

5.5

-1.3

2.9

4.1

5.1

3.4

3.6

-1.7

2.5

2.5

3.6

3.5

1.0

-5.5

6.6

4.3

Finland

-2.7

2.5

2.1

0.3

1.7

1.7

-5.5

-4.0

-2.8

69.3

71.2

71.7

0.3

-0.7

-0.5

-6.6

4.5

7.8

-4.8

2.1

2.6

-3.1

1.3

2.0

2.3

1.9

1.6

3.9

4.5

-0.3

-3.1

3.0

2.1

France

-8.0

6.0

4.8

0.5

1.9

1.4

-9.4

-9.8

-7.3

153.7 153.5

151.9

-2.0

-2.0

-2.2

-16.1

9.4

9.6

-7.2

5.0

6.3

-8.9

9.6

4.0

-3.2

5.6

2.8

-2.5

7.8

-0.4

-10.7

7.0

4.3

Germany

-5.1

3.6

4.6

0.5

2.7

1.4

-4.6

-4.2

-1.6

65.2

61.9

6.8

6.8

5.7

-10.2

9.4

5.2

-6.2

1.3

8.7

-3.5

4.1

3.2

3.7

1.3

0.4

4.1

1.0

4.0

-10.2

6.9

7.4

Greece

-7.8

5.7

5.9

-1.2

0.6

1.7

-9.8

-7.6

-3.3 262.0 247.1 227.5 -5.5

-3.2

-1.7

-18.3

8.5

14.5

-4.8

4.6

5.8

0.8

12.2

19.1

2.6

3.3

1.4

-3.9

3.8

3.3

-1.8

6.9

3.6

Hong Kong

-6.1

7.6

2.9

0.3

2.6

2.7

-5.8

-2.6

-1.6

0.3

1.5

2.5

6.5

7.2

6.6

-5.9

18.4

5.6

-9.9

4.6

5.4

-11.2

10.9

6.4

8.1

4.9

-0.4

-25.5

11.6

12.1

-5.9

6.0

1.9

Ireland

5.9

7.1

2.4

-0.3

2.0

1.9

-4.9

-5.0

-3.3

54.0

54.0

54.3

-2.6

18.7

18.4

9.5

7.9

1.8

-10.4

2.9

5.8

-22.9 -45.4

4.8

10.9

3.1

1.1

0.3

3.1

6.5

5.2

12.9

-3.9

Italy

-8.9

5.5

4.8

-0.1

1.6

1.3

-9.5

-11.0

-5.7

186.1 187.0

182.4

3.4

2.7

2.2

-14.5

12.4

6.6

-10.7

4.0

6.8

-9.2

4.4

1.6

2.4

0.5

-7.8

5.9

2.9

-11.0

11.6

3.9

Japan

-4.7

2.6

2.8

0.0

0.1

0.4

-12.3 -10.3-6.0 243.7 249.4 248.2

3.2

3.4

3.5

-11.8

14.0

6.6

-6.0

1.6

2.8

-4.3

1.1

3.1

2.7

1.9

0.1

-3.9

2.4

0.6

-10.6

8.7

3.3

Luxembourg

-1.3

5.8

2.3

0.0

2.1

1.4

-4.1

-3.5

0.3

24.9

26.5

25.2

4.3

4.4

5.4

2.5

7.8

1.8

-7.0

6.5

5.7

-8.8

6.2

3.9

6.9

4.9

-2.3

-2.5

6.0

15.5

-10.7

9.2

1.5

Netherlands

-3.8

3.0

3.4

1.3

2.2

1.7

-4.3

-5.8

-3.6

69.8

71.7

71.1

7.0

10.4

10.5

-4.8

5.2

4.5

-6.6

1.5

6.9

-4.2

6.9

2.7

1.0

1.9

1.6

2.6

4.6

6.6

-3.5

4.7

3.0

New Zealand

-1.2

6.1

2.1

1.7

2.4

2.0

-8.4

-3.3

-4.6

43.4

39.8

41.6

-1.0

-5.3

-4.8

-11.9

-9.4

9.2

-2.0

9.5

0.0

-7.5

16.1

2.4

6.4

3.2

-2.2

-0.1

11.2

0.8

-4.5

5.2

2.1
3.7

64.9

13.2

Norway

-1.3

3.9

3.0

1.3

2.9

2.0

-1.0

0.4

-0.1

52.8

53.3

56.8

1.9

6.3

3.7

-0.8

3.4

5.1

-7.3

3.1

6.6

-3.8

2.3

3.4

1.7

2.2

2.6

7.3

3.4

2.9

4.1

3.7

Portugal

-7.6

4.3

5.5

0.0

1.3

1.0

-5.8

-4.4

-3.3

155.5 154.0

147.4

-1.2

-0.2

1.2

-18.6

12.2

9.4

-5.8

5.0

5.3

-1.8

8.6

6.3

0.4

3.0

3.4

-3.3

5.1

3.6

-7.0

5.8

1.9

Singapore

-5.4

6.4

4.0

-0.2

2.1

1.3

-4.7

-3.7

-2.5

150.2 146.9

140.3

17.7

20.1

17.7

-4.3

8.6

9.2

-14.1

5.2

14.4

-13.7

10.3

8.7

12.6

2.4

-0.3

-16.1

10.2

11.0

7.6

12.7

3.5

Spain

-10.8

6.6

6.1

-0.3

2.1

1.4

-11.3

-8.1

-5.8

146.8 143.6

138.9

0.7

0.9

1.5

-20.2

10.1

10.3

-12.1

7.1

6.4

-11.4

8.6

8.5

3.8

3.2

2.0

-7.1

5.6

5.1

-9.5

8.9

2.9

South Korea

-0.9

4.5

3.4

0.5

2.0

1.6

-3.8

-3.9

-3.6

51.6

54.0

56.9

4.5

4.7

3.7

-1.8

11.2

5.6

-5.0

3.0

4.5

2.6

4.3

3.6

5.0

4.0

3.8

-0.1

4.8

4.8

-0.1

8.2

3.5

Sweden

-2.9

4.4

2.7

0.5

1.8

1.7

-3.0

-2.5

-1.4

51.7

51.5

50.5

5.7

4.7

4.4

-5.0

9.6

2.7

-4.8

4.8

3.7

-0.6

2.4

3.5

-0.9

1.4

1.2

2.1

6.5

1.6

-4.5

7.9

1.8

Switzerland

-2.7

3.9

3.2

-0.7

0.5

0.6

-2.0

-2.3

-0.4

28.6

29.7

29.0

5.0

7.4

9.0

-5.6

6.9

7.5

-4.4

4.5

4.2

-2.2

4.0

4.1

3.6

3.9

-2.0

2.3

2.2

-1.1

-3.9

11.4

4.3

United Kingdom

-9.8

7.3

6.7

0.9

2.0

2.4

-12.7

-11.0

-4.8

104.5 106.2

104.1 -3.5

-2.9

-3.3

-16.4

3.0

8.1

-10.6

4.0

9.7

-8.8

8.8

6.6

-6.5

13.9

0.0

0.5

7.2

2.9

-8.0

5.1

3.6

United States

-3.5

7.0

4.3

1.2

4.1

2.6

-15.9 -12.3-6.0

160.5 153.5

149.8

-2.9

-3.4

-3.0

-12.9

5.8

9.4

-3.9

8.9

4.8

-0.8

7.0

2.5

0.3

1.7

0.3

1.0

11.9

1.2

-7.2

6.2

4.1

Eurozone

-6.7

5.0

4.6

0.3

2.1

1.4

-7.4

-4.1

-

2.1

2.6

2.3

-9.6

9.1

6.1

-8.0

3.5

7.1

-8.4

5.9

4.2

1.4

2.9

1.4

-1.1

4.5

2.8

-8.4

8.8

4.9

-6.9

-

-

Sources: Oxford Economics, Atradius

Atradius Economic Outlook – August 2021 | 22

Table A2: Macroeconomic headline figures - emerging markets
Budget balance(% of GDP)Grossgovernment
debt (% ofGDP)

Current
account(% of GDP)

Export growth Private cons.
(% change p.a.) (% change p.a.)

Fixed
Government
Retail sales Industrial prod.
investment
consumption(% change p.a.) (% change p.a.)(% change p.a.) (% change p.a.)

GDP growth(% change p.a.)

Inflation(% change p.a.)2020 2021 2022

2020

China

2.3

8.4

6.1

2.5

1.4

2.7

-8.3

-7.0

-6.9

43.6

44.7

48.1

1.6

1.8

1.3

2.1

19.0

6.5

-2.4

11.7

9.1

4.5

4.9

5.9

2.8

8.0

4.1

-2.1

12.1

9.3

2.5

10.2

7.0

India

-7.0

9.1

7.1

6.6

5.4

4.8

-6.7

-7.9

-5.7

56.6

57.9

58.6

1.5

-1.3

-1.8

-9.0

16.4

7.4

-9.4

8.2

7.1

-13.0

13.2

9.1

-1.1

27.1

2.7

-7.7

10.1

8.8

-11.0

10.0

7.3

Indonesia

-2.1

3.3

6.9

2.0

2.0

2.9

-6.2

-6.5

-4.7

44.3

49.5

48.8

-0.4

-1.4

-2.1

-7.7

19.0

2.9

-2.7

1.6

6.6

-4.9

6.0

9.2

1.9

9.4

5.4

-11.9

2.9

25.5

-2.9

5.3

5.1

Malaysia

-5.6

5.2

6.6

-1.1

3.0

2.2

-6.3

-6.2

-3.8

62.1

63.7

62.4

4.2

3.2

1.3

-8.9

16.7

4.9

-4.3

7.0

6.5

-14.5

7.3

11.2

3.9

5.8

0.3

-3.5

7.8

7.1

-4.4

10.3

6.5

Thailand

-6.1

2.4

6.1

-0.8

1.1

1.4

-6.6

-5.1

-4.7

44.9

52.6

52.3

3.2

-0.7

3.6

-19.4

9.9

15.0

-1.0

2.5

4.6

-4.8

6.5

2.2

0.9

1.1

1.7

-10.4

5.2

4.5

-9.6

9.4

5.6

Argentina

-9.9

7.4

2.6

42.0

46.8

42.3

-8.5

-4.7

-3.4

102.8 92.0

85.8

0.9

1.3

0.8

-17.3

9.1

3.6

-13.8

10.1

3.9

-12.9

18.7

-7.5

-3.3

3.8

2.1

-11.2

13.3

6.7

-8.0

9.1

2.2

Brazil

-4.4

5.7

2.1

3.2

6.6

4.2

-14.0

-6.8

-6.5

88.8

85.6

87.0

-1.4

-1.5

-2.0

-2.1

5.6

6.0

-5.5

4.8

3.2

-0.6

17.3

0.8

-4.7

1.1

3.4

0.8

2.1

3.2

-4.7

9.3

3.5

Chile

-6.0

7.6

3.1

3.0

3.5

3.1

-7.4

-5.1

-4.6

32.5

34.8

37.8

1.4

-3.3

-2.8

-1.1

1.0

6.2

-7.6

10.7

0.8

-11.7

12.3

4.7

-3.7

9.8

4.1

-4.0

16.6

2.4

-1.0

2.0

2.2

Colombia

-6.8

7.5

4.2

2.5

3.1

3.2

-8.1

-8.2

-7.0

62.8

65.2

67.7

-3.4

-3.9

-3.9

-18.3

16.3

12.0

-5.6

7.1

1.9

-20.6

17.7

5.6

3.7

2.6

0.3

-

-

-

-7.9

8.6

3.6

Mexico

-8.5

6.2

3.2

3.4

5.2

3.8

-3.0

-3.0

-2.7

54.0

52.7

51.5

2.4

0.5

-0.3

-7.2

11.0

5.5

-10.7

8.1

3.7

-18.4

11.7

3.3

2.3

0.4

1.3

-9.6

8.2

3.7

-10.1

9.0

3.4

Peru

-11.1

10.6

4.6

1.8

2.7

2.9

-8.9

-5.2

-3.0

34.9

36.2

36.8

0.7

-0.4

-1.3

-20.6 22.4

7.7

-8.7

7.2

4.7

-19.1 27.2

-2.3

6.1

6.4

-2.1

-

-

-

-12.9

10.8

4.1

Venezuela

-34.9

0.8

13.1

2669.2 624.0 239.2 -17.8

-13.7

-9.9

346.9 322.3 254.1 -2.3

4.5

5.9

-42.2

-6.5

20.1 -38.5

6.0

12.5

-31.6

7.0

29.7

-15.5

2.1

0.3

-33.3

11.5

18.0

-35.0

0.1

4.3

Bulgaria

-3.8

5.0

3.5

1.7

2.2

2.2

-2.9

-2.8

-1.1

23.6

23.2

23.0

-0.6

-0.3

2.0

-11.9

14.2

5.3

0.9

4.0

1.6

-8.3

9.4

15.5

5.1

3.2

3.2

-10.0

11.6

3.9

-6.1

7.9

2.0

CIS

-2.8

3.7

3.7

4.4

6.9

5.3

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-2.5

3.3

2.5

Czech Republic

-5.8

3.6

4.6

3.2

2.5

2.1

-6.5

-7.9

-3.8

36.0

44.9

45.3

3.5

5.3

3.7

-7.0

10.6

3.0

-6.8

-0.4

6.2

-7.2

2.2

8.7

3.4

3.1

0.9

-0.8

2.1

6.5

-7.0

10.7

3.4

Hungary

-5.1

7.0

4.8

3.3

4.1

3.6

-8.1

-7.4

-5.6

80.4

81.8

82.3

-0.2

0.7

0.4

-6.8

12.2

5.1

-2.3

4.2

4.4

-7.3

6.3

10.9

-1.1

4.6

1.2

-0.4

2.6

2.7

-7.1

12.8

4.6

Poland

-2.7

4.9

5.7

3.4

3.9

3.1

-7.1

-3.7

-2.2

51.5

50.6

48.3

3.5

2.7

2.3

-0.2

11.9

6.7

-3.1

5.9

5.6

-8.2

13.9

6.3

4.0

2.9

3.2

2.8

6.8

5.4

-2.0

13.1

2.9

Romania

-3.7

6.9

4.6

2.6

4.1

3.1

-9.7

-7.4

-6.2

49.9

55.3

60.5

-5.3

-5.1

-5.3

-9.7

12.9

6.4

-4.5

7.0

5.2

7.2

5.3

5.6

2.0

2.5

3.8

2.4

7.9

3.2

-9.5

8.3

4.8

Russia

-3.0

3.4

2.5

3.4

5.9

4.3

-3.8

-0.6

-1.3

19.3

20.0

21.9

2.4

2.6

2.0

-4.3

3.4

2.5

-8.5

6.0

2.5

-4.3

3.1

4.1

4.0

1.7

1.7

-3.1

2.6

2.7

-2.9

3.2

2.3

Turkey

1.8

7.0

2.3

12.3

17.2

13.3

-3.7

-2.1

-2.4

35.9

37.3

35.8

-5.4

-3.4

-3.3

-15.4

16.5

5.1

3.2

5.0

2.3

6.5

5.7

3.0

2.3

0.7

1.7

3.3

5.6

2.3

2.2

11.7

2.0

Ukraine

-4.0

4.4

4.2

2.7

9.3

6.7

-6.0

-4.6

-3.0

59.3

56.3

52.2

3.3

-1.5

-2.0

-5.6

-4.6

4.8

1.4

13.5

4.4

-24.4

-0.5

9.8

-2.9

-0.8

1.3

-

-

-

-4.5

3.8

3.6

Egypt

1.5

4.7

3.4

5.0

5.4

7.0

-7.9

-7.8

-7.6

92.9

95.6

97.4

-3.7

-4.4

-4.2

-32.8

17.6

7.2

9.6

3.7

2.3

-36.0 23.5

10.5

6.1

3.2

5.0

9.6

3.7

2.3

-10.1

6.8

3.8

Morocco

-7.1

5.8

2.5

0.6

0.7

1.6

-7.7

-6.7

-5.8

97.4

99.7

102.4

-1.4

-5.0

-4.8

-14.8

4.1

6.2

-8.7

11.5

1.5

-8.6

-0.9

4.3

4.4

3.4

0.9

-8.7

11.5

1.5

-6.3

4.2

4.6

Qatar

-3.6

2.5

3.7

-2.6

1.5

2.1

-2.1

1.6

1.5

71.6

65.6

67.4

-2.5

4.7

3.4

-7.1

6.2

2.3

-5.3

5.3

4.0

-6.2

2.6

1.9

-2.3

2.6

4.1

-4.8

5.8

4.6

-2.9

2.2

2.1

Saudi Arabia

-4.1

2.2

4.7

3.4

4.6

1.8

-11.2

-0.9

0.8

32.5

30.6

30.8

-2.8

5.5

6.1

-10.8

-1.6

11.1

-6.4

5.3

3.9

-13.5

20.0

5.8

4.2

-5.7

1.4

-

-

-

-9.2

5.5

5.5

Tunisia

-8.6

3.9

1.8

5.6

5.4

6.9

-9.8

-9.2

-8.4

84.2

90.3

94.4

-6.8

-10.3

-10.5

-12.6

4.3

6.0

-14.2

4.7

2.4

-14.4

4.2

2.9

7.2

2.5

1.5

-

-

-

-5.3

6.1

0.7

2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022

United Arab Emirates

-6.1

1.3

4.3

-2.1

-0.6

1.2

-7.4

-0.6

-1.0

37.8

33.1

32.8

5.9

9.6

8.6

-7.0

5.3

4.7

-12.5

3.7

4.2

5.8

6.7

3.8

0.7

1.5

2.4

-12.5

3.7

4.2

-4.4

-2.1

4.7

MENA

-4.8

3.9

4.1

18.9

28.9

16.1

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-7.7

2.8

4.2

Ghana

0.3

4.7

4.8

9.9

9.3

9.1

-11.1

-9.2

-8.3

76.3

83.6

88.3

-3.2

-3.8

-3.7

-6.7

4.4

6.0

-8.6

10.0

9.2

1.8

7.0

5.2

10.1

7.6

4.2

-

-

-

1.0

4.3

4.5

Kenya

-0.4

4.9

4.8

5.3

5.8

23 | Atradius Economic Outlook– August 2021
-1.8
3.1
3.3
13.2
16.8

5.9

-8.7

-7.9

-6.9

68.8

70.7

73.4

-4.2

-5.3

-5.1

-9.7

8.5

7.2

-0.4

7.9

5.3

-5.1

6.4

6.8

7.0

3.9

3.4

-

-

-

-0.3

5.0

4.8

13.5

-7.7

-6.6

-5.9

21.4

21.2

21.0

-4.2

-1.5

1.4

-24.7

2.7

13.3

0.0

6.7

2.9

-7.1

10.1

2.5

62.1

-6.7

2.9

0.0

6.7

2.9

-1.0

4.0

5.0

South Africa

5.0

-10.7

-10.2

-9.2

77.1

79.6

85.8

2.0

3.0

-0.2

-10.3

8.3

1.6

-5.4

5.0

1.3

-17.5

4.3

8.1

0.5

0.6

0.9

-5.5

5.0

1.3

-10.8

8.8

0.0

Nigeria

-7.0

4.3

2.3

3.3

4.4

Sources: Oxford Economics, AtradiusIf you’ve found this economic update useful, why not visit our website www.atradius.com,
where you’ll find many more Atradius publications focusing on the global economy,
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