Global economies may be rebounding but the rapid spread of the Delta variant will continue to pose risks that could derail growth and revenues.

       Vaccination rates, the extent of serious infections and mobility restrictions are key determinants of where countries find themselves in their economic recovery cycles, says Moody’s Investors Service in its “Global Macro Outlook 2021-22” August update.

       It has forecast that G20 economies will grow 6.2% as a whole in 2021, after a 3.2% contraction last year, followed by a 4.5% growth in 2022.

       G20 advanced economies will grow 5.6% and 4.2%, and emerging markets will expand 7.2% and 5.1% in 2021 and 2022, respectively. Excluding China, G20 emerging market economies will expand 5.7% and 4.1% in 2021 and 2022, respectively.

       For most G20 economies, Moody’s expects inflation to remain elevated through 2021 and subside in 2022.

       However, how the pandemic evolves and affects growth is a factor for consideration. So will the unprecedentedly high levels of public and private sector debt. It says the boost in digitisation brought about by the pandemic could increase productivity but also create structural unemployment and social tensions.

       The pandemic has also accelerated political realignments, which could spur geopolitical tensions and cyber risk, it adds.

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