· World Bank forecasts a 4% global rate of growth in 2021; potential global growth will be lower in the next decade.
· OPEC+ agrees to maintain production cuts at 7.2 million daily barrels.
· Democrats win one of Georgia`s seats in the Senate, the second is too close to call.
· Economic indicators: Employment in the US private sector contracts for the first time since April (-123k vs 88k e.).
The World Bank published its global growth forecasts yesterday and warned about a possible lost decade of global growth. The World Bank expects to see a 4% expansion in global GDP in 2021 after seeing a 4.3% contraction in 2020. In its report the World Bank highlights the challenges that worldwide growth faces in the long term as the global economy could face a lost decade of global growth. Even though the worldwide recovery is on its way and vaccination programs are pushing towards a return to normalcy, the World Bank doesn’t expect to see similar levels of activity compared to those recorded prior to the pandemic in a long time. According to the World Bank, long term expectations were already weak given low levels of productivity and the ageing of the population, although it`s possible that the COVID-19 triggered crisis could worsen the situation. The World Bank considers that potential for global economic growth will go down to 1.9% annually between 2020 and 2029, figure below the number calculated prior to the pandemic, which forecasted a 2.1% annual rate of growth. Lower levels of investment because of the pandemic along with persistent unemployment are the main factors that could cause a lower rate of growth. This would lead to greater poverty at a global level. The World Bank suggests carrying out structural reforms to avoid this, with strong investments in infrastructure, diversification in the economy and supporting the inclusion of women in the workforce.
The Organization of Petroleum Exporting Countries and its allies (OPEC+) reached an agreement to extend production cuts until February. In a difficult negotiation, which lasted more than expected, members of the OPEC+ decided to maintain global production cuts at 7.2 million daily barrels after Russia proposed a 500 thousand daily barrel increase. Saudi Arabia led negotiations and committed itself to decreasing its own production to allow Russia and other countries to increase their production without altering the total amount. Saudi Arabia`s concession has given international oil prices new strength.