HELP IS ON THE WAY But the world still needs a shot in the arm!

The economic outlook is starting to brighten just about everywhere you look

- Peter Coy

As the coronavirus spread beyond China last spring, forecasters abruptly added two percent-age points to their growth predictions for 2021. It was as if they had turned into a chorus of red-headed Orphan Annies singing, “I love ya, tomorrow.”

Their upgrades didn’t signify optimism, though. They were a consequence of the downturn the forecasters were expecting for 2020. With a deep recession as the new baseline, the partial rebound they anticipated would represent a big year-over-year percentage increase in output.

And here we are. Covid-19 is claiming more lives than ever, and vaccines are rolling out more slowly than expected, so economic activity this year will track well below its pre-pandemic trajectory. But because it won’t be as depressed as last year, on paper 2021 will look like a blockbuster. Bloomberg Economics is forecasting a 4.9% increase in the world’s gross domestic product and a 3.5% increase for the U.S.—the strongest since 2005. There’s less here than meets the eye.

Economic growth is hard to predict even in a normal year. It’s infinitely harder with a pandemic raging. Vaccines were developed in record time. But more contagious strains of Covid are spreading rapidly, vaccine distribution is proving problematic, and a lot of people still aren’t taking precautions for themselves and those around them. “There will be bumps along the way,” Bloomberg Economics writes in its global outlook, understatedly.