For the second year in a row, the global economy is struggling to cope with the negative effects of the coronavirus pandemic. According to Ozios' analysis, China is doing best among the world's largest economic centres. Its growth this year may climb to the pace that the world's most populous country was used to at the beginning of the last decade. The United States has already surpassed the pre-pandemic level, and the European Union is likely to do so next year. [1]

Although the world is facing its second severe economic crisis in the last 12 years, China does not seem to be facing economic difficulties at all. When the global economy was hit by the deepest recession since the end of World War II in 2009, the Chinese economy slowed only slightly. A similar scenario is repeated in the case of a coronavirus pandemic. While developed countries struggled with an even deeper decline in the performance of their economies, China has only slowed its growth again, albeit much more markedly than 12 years ago. China's gross domestic product grew by only 2.3 percent in 2020, a year earlier it was almost six percent.

China has only slowed growth

The year 2021 then means a robust recovery for China. Although we do not yet have complete data for this year, according to the current estimate of the Organization for Economic Co-operation and Development(OECD), China's gross domestic product will grow by 8.1 percent in 2021. Given that China maintained economic growth at positive levels last year, we cannot really talk about any return of gross domestic product to pre-pandemic levels. It can be at most a return to a pre-pandemic growth trajectory, which ranged between 5 and 6 percent per year. For the next two years, the OECD predicts economic growth of 5.1 percent for China. [2]

China is able to achieve all this with a fairly decent stability in the price level and the labour market. According to the OECD, the average level of inflation in China will reach 0.8 percent this year, and will accelerate to 2.4 percent in the next two years. [3] Although the unemployment rate rose from a pre-pandemic 3.6 to 4.2 percent last year, this year the unemployment rate fell to 3.9 in September. China still lacks about 0.3 percentage points to reach the unemployment rate as before the coronavirus pandemic.

EU is on pre-pandemic unemployment rate

However, the European Union can boast that the unemployment rate at the end of October this year has fallen to the levels last seen on Eurostat's website last February. At that time, the unemployment rate in the EU27 was 6.6 percent, now it is only 0.1 percentage point higher. In the meantime, however, the EU has experienced unemployment approaching eight percent.

However, the European Union lags behind China in terms of GDP growth. Last year, it fell by less than 6 percent, and this year was marked by a rapid return to pre-pandemic levels, although they will probably not be overcome until next year. So far in 2021, the EU's gross domestic product has increased year-on-year in only two of the three "calculated" quarters (by 14.4 percent in the second, by 3.9 percent in the third), the first quarter bringing a year-on-year decline of more than one percent. According to the European Commission's forecast, the EU economy should grow by five percent for the whole of this year. [4]

A major risk to maintaining the growth trajectory of the European economy is the unusually high inflation rate, which, according to preliminary estimates, reached 4.9 per cent in annual terms (within the euro area) at the end of November. And inflation risks persist for the beginning of next year. [5]

The US is economically out of the pandemic

The United States is also plagued by high inflation. At the end of November, prices in the USA rose by 6.8 percent year-on-year, which is the most since June 1982. High inflation goes hand in hand with low unemployment, which fell to 4.2 percent in the same month. Although it is still slightly higher level than the US reached on the eve of the pandemic, there is probably no further room for a significant decline. [6] Nevertheless, the US has about a third lower unemployment rate than the European Union.

The US also outperforms the EU in terms of gross domestic product. Firstly, it did not experience such a sharp decline in economic performance last year, and secondly, it has managed to recover relatively successfully, already reaching pre-pandemic levels at the turn of the first and second quarters, according to Eurostat data. The European Union is likely to do so at the turn of this year and next year, or in the first months of 2022. [7]

[1,2,3,4,5,6,7] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate or the current economic environment, which may change. Such statements are not guarantees of future performance. They include risks and other uncertainties that are difficult to predict. The results may differ materially from those expressed or implied in any forward-looking statements.