BANNOCKBURN, IL – The global economy should grow roughly 5% in 2021, says IPC, driven by growth in the US and China. The US should see first quarter growth eclipse 6% (seasonally adjusted annual rate), led by additional fiscal stimulus and the broad lifting of Covid-related restrictions.

Monetary policy remains accommodative, which should help further growth, and consumer and business confidence are roaring back, as vaccination rates increase, and consumers appear anxious to spend. Business investment grew about 7.5% in the first quarter, and GDP should come in around 6.6% for the period. The US is set to grow 6.3% in 2021 and 4.3% in 2022.

In the US, auto production increased 3% in March and is up 32.3% over the last year, but these numbers are inflated by the strong decline at the onset of the pandemic, says IPC. Auto production is essentially flat over the last two years, down 0.3%. Industrial rose 3.3% last month. The sector is up 1.9% over the last year, but down 3.7% compared to March 2019. The defense and space equipment segment increased 4.4% in March and is up 6.4% over the last year, and up 8.8% over the last two years.

China’s economy grew 18.3% year-over-year in the first quarter. IPC expects China’s economy to grow 8.4% this year. Industrial production was up 14.1% year-over-year in March, and industrial profits were strong as the global demand for raw materials continues to increase. China’s GDP grew 18.3% in the first quarter.

India is set to grow 10% this year, despite a tremendous spike in Covid cases. A two-month lockdown in 2020 pushed the economy into recession. The economy there should shrink in the current quarter. While much activity should return mid-year, a prolonged slowdown will hinder growth for the year.

Growth in Europe has been held back as additional lockdown measures were implemented following Covid spikes, says IPC. Vaccination rates are starting to pick up there, and this will help growth throughout Europe, especially Spain and Italy. Europe’s manufacturing sector continues to strengthen. GDP for the EU fell 0.5% during the fourth quarter and was down 0.7% for the Euro area compared to the third quarter. For the year, GDP for the Euro area fell 6.6% and 6.2% for the EU. IPC expects the economy to shrink 0.6% in the first quarter, with Germany down 1.5%, Italy 0.8%, and Spain 0.8%, while France will be flat over the prior quarter.

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