In 2021, the global economy recovered sharply.

Following the shock of the COVID-19 pandemic in 2020, the world economy had an optimistic outlook for 2021. The main reason for this optimism was the vaccination programs implemented against the pandemic. Several vaccines were developed against the pandemic and approved for administration. Developed countries vaccinated most of their citizens, while the efforts progressed slower in developing countries. And despite international aid, vaccination levels of underdeveloped countries were inadequate. However, as vaccines proved to be successful in fighting the pandemic, lockdowns and restrictions were gradually lifted, beginning with the second quarter of the year.

In line with these developments regarding the pandemic, the world economy entered a process of recovery as of 1Q21. As the second quarter rolled in, this recovery turned into rapid growth. Relaxed measures entailed by increasing vaccination levels supported the growth trend. After a halt that had lasted more than a year, activities, especially in the service sector, continued. Economies benefited from the fact that the expenses, which had been deferred during the lockdown, started to be charged.

This fast recovery and the new normal conditions laid the groundwork for the world economy to grow by 6.1 percent in 2021. Growth rates were realized as 5.2 percent in developed countries and 6.8 percent in developing countries.

While the growth performance in 2021 largely remedied the pandemic-induced losses, there were still vaccination-based differences among regions and countries. The US economy grew by 5.7 percent in 2021, the Eurozone by 5.3 percent, Japan by 1.6 percent, and the UK by 7.4 percent.

China, one of the few economies recording growth when the COVID-19 shock hit in 2020, gained a strong momentum with 8.1 percent in 2021, making a significant contribution to global growth. India, which contracted by 6.6 percent in 2020, showed a recovery of 8.9 percent in the following year. Developing Asia stands out with a growth of 7.3 percent. However, the disparity among these countries is quite large. Growth in the ASEAN-5 countries, where strict lockdown conditions were imposed, remained limited with 3.4 percent.

Developing European countries achieved a high growth rate of 6.7 percent, while Middle Eastern and Central Asian countries grew by 5.7 percent during the year. Rising energy and commodity prices further supported growth in the latter. In Sub-Saharan African countries, which lagged far behind in vaccination levels, the growth was realized as 4.5 percent.

In summary, while the growth performance in 2021 largely remedied the pandemic-induced losses, there were still vaccination-based differences among regions and countries. Thus, many underdeveloped and developing countries achieved limited growth, thus further widening the regional development gap.