• 5.5% recovery in the global economy for 2021 from 2020 COVID-19 adversely impacted -3.5% global contraction (published by the International Monetary Fund (IMF)’s World Economic Outlook (WEO) in January 2021 point).
• This positive outlook is driven by high expectations of a strong comeback in economic activities as the vaccines are becoming widely available during the year as well as the continuous policy support in the larger economies however, risks remain elevated.
• The new COVID-19 variants present risks and uncertainty on the global recovery as restrictions/national lockdowns may be re-imposed (as partially implemented in New Zealand (NZ) recently).
• The rollout of vaccine also raises concerns of social unrest with added pressure of damages on labor markets and the early withdrawal of policy support before a full recovery.
• Global inflation continues to be subdued.
• Inflation rates are projected to generally moderate below most central bank’s targets of 1.5%.
• Inflation rates in developing countries are projected to drop due to reduced supply-side pressures but average around 4.2% in the year ahead.
• US dollar continues to be under pressure against the major currencies (in the Samoan Tala Currency Basket), driven by lower safe-haven appeal for the greenback following progress on COVID-19 vaccines & stimulus measures.
• Overall, most central banks are continuing with their easing monetary policies to support their respective economies.
• As a result, the current near 0% interest rates worldwide are expected to continue for the next 2/3 years.
