The global and U.S. economies continue to recover while facing challenges in 2021.
That's the view of Zbyszko Tabernacki, economic senior vice president with consulting firm IHS Markit. He spoke Oct. 26 as part of the online Global Plastics Summit 2021.
"Economies were totally unprepared for the tectonic shift in supply and demand," Tabernacki said. "On the company, household and national levels, it's not easy to solve."
The global economy continues to show strength, but signals indicate that growth likely peaked in the second quarter. As a result, U.S. GDP growth for the third quarter is likely to be around 1.5-2 percent.
"The slowdown is moderating expansion, but we're not entering into a recession," Tabernacki said.
The global economy could improve in the next several months as pandemic-related travel restrictions are loosened in many parts of the world, with the exception of Asia. As this happens, Tabernacki said that demand will move away from goods to services. He added that this move "is critical to resolve problems in supply chains."
The economic rebound from 2020 has been most prominent in developed markets. Emerging markets have underperformed because of challenges to manufacturing and contractions in local demand.
Tailwinds helping the global economy, according to Tabernacki, are rising vaccination rates and the release of pent-up consumer demand. Headwinds having a negative impact include supply constraints, shipping bottlenecks and labor shortages.
The recovery also has affected different industries in uneven ways in 2021. Automotive, manufacturing, construction and household goods have struggled, while technology, software and machinery have thrived.
Tabernacki said that the biggest challenge facing the economy is the imbalance between demand and output, with orders exceeding what can be delivered.
"This is a difference at a level we haven't seen historically, and it's mostly due to problems with supply chains," he said. "It will take time to sort this out. … It will continue well into 2022."
Global commodity prices peaked in May and had been trending down until tightening in recent weeks because of higher energy prices. As a result, Tabernacki said the fourth quarter of 2021 could see "unprecedented volatility."
He also cited inflation as "a key risk," but added that it should be transitory, since it's linked to the supply/demand imbalance. Labor market challenges also are expected to lead to higher wages in many industries.
Looking ahead, Tabernacki said that IHS expects global GDP growth of 5.5 percent for 2021, with U.S. GDP growth slightly lower at 5.4 percent and GDP growth in the eurozone — not counting the United Kingdom — at 5 percent. By comparison, global and U.S. GDP each were down 3.4 percent in 2020, with the eurozone down 6.4 percent.
For 2022, IHS projects global and U.S. GDP growth of 4.3 percent, with the eurozone at 4 percent. In China, GDP growth should increase from 2.3 percent in 2020 to 8.2 percent in 2021, before declining to 5.7 percent in 2022.