The availability and rapid distribution of vaccines enabled the global economy to re-open in 2021. With the approval of several vaccines in early 2021, the main developed economies started aggressive, mass scale vaccination programs. While the level of vaccines varied across countries, the overall results are better than expected. Most developed economies have achieved a vaccination level of around 70%. These are impressive results given logistical challenges and vaccine hesitancies. However, the emergence of the more infectious Delta variant means that the threshold for herd immunity is significantly higher, leading to waves of pandemic and episodic regional lockdowns. By the end of 2021, most of the main developed economies have adopted a “living with the virus” approach which reduces the level of economic disruption.

The main developed economies enjoyed robust, if uneven and volatile, economic growth in 2021. Episodic outbreaks of the pandemic led to more localised lockdowns and disruptions which were temporary in nature. Among the major developed economies, the US will likely record GDP growth of around 5.6% in 2021, compared to 5.0% for Europe, 2.3% for Japan and Australia’s 3.8%. While the likely GDP growth figures are inflated by the Coronavirus driven low GDP levels in 2020, they still represent a very sharp economic recovery. China, despite negative headlines and sharply decelerating growth in the second half of 2021, will likely grow by around 8.0% in 2021 which is still very robust.