In February 2020, we chose to base our analysis on macroeconomic models adapted spe- cifically to flu epidemics to understand the effects of the COVID-19 pandemic. This is why we obtained less alarming forecasts on activity contractions than those of international institutions having continued to use the regular models in 2020. Assuming a new stimulus plan is implemented in the United States in early 2021, the country’s GDP should return to end-2019 levels in second-quarter 2021, while eurozone GDP will return to pre-crisis levels in second-quarter 2023. Chinese GDP is already 4.1% higher than in fourth-quarter 2019. The economic crisis resulting from the COVID-19 pandemic is entirely dissimilar to the major financial crisis and the return to pre-crisis GDP levels will be much faster. However, the impacts on the labour supply and education are expected to increase inequalities and weigh on potential growth, particularly in European and developing countries.
The more restrictive and widespread measures implemented in most European countries to combat the pandemic led to a substantial dip in
GDP in second-quarter 2020. In addition, European aid has proved modest thus far relative to the US recovery plan worth 15% of GDP and implemented as early as April. Only Germany has provided similar and equally swift support. While France, Italy and Spain will roll out fresh measures in 2021, the belated implementation of some support measures is accentuating the lag effects. Consequently, we are expecting catch-up to be faster in the United States than in Europe. US growth could reach 4.3% in 2021, after falling 3.5% in 2020, and is expected to come out at 3% in 2022. This would result in a more emphatic acceleration in inflation in the United States than in the eurozone and a more consequential increase in long rates than in the eurozone, despite the additional interventions we expect from the Federal Reserve. In the eurozone, GDP increases of 4.5% in 2021 and 3.8% in 2022 will remain sluggish given the 7.5% contraction in 2020. In China, acce- lerated investments in infrastructure and the focus of the new five-year plan on domestic demand could lead to growth of 9.8% in 2021 and 5% in 2022. Asian countries will benefit
from a recovery in consumption and Chinese private investment, as well as growth in US and European imports. We are not expecting a return to normal before the resumption of the international circulation of individuals, but emerging countries could benefit from the increase in commodities prices. According to our forecasts, emerging country growth will reach 5.6% in 2021 and 4.3% in 2022 after -2% in 2020. As a result, world growth will come out at 5% in 2021 and 4% in 2022 after a -3.9% contraction in global GDP in 2020.
In the longer term, in addition to changes in consumer behaviour, the most important factor could be the reduced labour supply, which is weighing on productivity and the growth in GDP per inhabitant. The impact will vary according to the duration of school and university closures, as well as the employee support poli- cies implemented to limit absenteeism.
An effective and widely available vaccine by end-2021 would help the eurozone to make up lost ground more quickly, as its economy was more negatively impacted by restrictive measures aimed at halting the spread of the virus. This would also boost the outlook for services based heavily on manual labour. Interest rate and inflation expectations would recover more suddenly than we expect at this stage, but central banks have the rate curve under control. They will continue to limit any steepe- ning and will provide the necessary liquidity for containing the increase in bankruptcies. A swift catch-up in the GDP level would also substantially reduce debt as a percentage of GDP. The situation would thus be entirely different to the 2009 crisis, when it took 22 quarters for eurozone GDP to return to pre-crisis levels and 13 quarters for the United States. But struc- tural impacts will persist, and in particular a medium-term reduction in the labour supply.
