After a historic contraction in 2020, the global economy is set to rebound this year, but recoveries are diverging by country. The global economy is projected to grow 6 percent in 2021, stronger than had previously been expected, reflecting fiscal support in advanced economies, especially the US, and faster rollout of vaccines than anticipated. However, amid COVID-related uncertainty, recoveries are varying within as well as between countries. Growth is projected to vary substantially depending on the policy space available, and how much a country relies on tourism and commodity exports. While advanced economies as a group are now projected to grow by 5.1 percent in 2021, growth in Sub-Saharan Africa (SSA) will rebound by only 3.4 percent.

Despite uncertainty about the path of the pandemic, the global outlook will continue to improve gradually. For 2022, at 4.4 percent global growth is projected to be stronger than previously forecast. The upgrade in global growth for next year reflects the improved outlook in advanced economies, particularly the United States. Global growth is expected to moderate gradually over the medium term, averaging 3.4 percent for 2023–26. Emerging markets and developing economies (EMDEs) are projected to average faster growth, followed by countries in the West African Economic and Monetary Union (WAEMU) and SSA.

The slowing of global growth can be attributed to pre-pandemic structural impediments to growth, such as aging populations in advanced economies and low capital accumulation and minimal productivity growth in developing countries. The global outlook is dimmed by COVID-related uncertainty, especially the rollout of vaccines and the policy space available to support recovery.

With a push from domestic demand, Sierra Leone’s economy is projected to recover from the COVID19 contraction but grow more slowly than before COVID-19. Real GDP is expected to rebound by 3.0 percent in 2021, an upward revision of 0.8 percentage point (pp) relative of the 2020 Spring forecast. This growth upgrade reflects the easing of COVID-related restrictions and the government fiscal response to the pandemic. With external demand subdued, aggregate growth primarily reflects stronger domestic demand. This year, growth will be driven by domestic demand, with private consumption and investment contributing the most. On the supply side, there are substantial cross-sectoral differences despite aggregate production growth. For 2021, real GDP at factor cost is also projected to grow by 3 percent, mainly as a result of faster agricultural production. However, Sierra Leone’s potential growth is being slowed by weakening total factor productivity (TFP).

Despite rebounding growth, the losses in output and income per capita have been substantial. With gaps of –4 percent of potential output in 2020 and 1.7 percent in 2021, Sierra Leone’s economy is operating far below capacity. The cumulative output lost in 2020–21 amounts to Le 1.5 trillion (US$146.5 million). The output lost is approximated by the difference in real GDP at factor cost between World Bank projections between the 2019 Annual Meetings and the 2021 Spring Meetings. The economic contraction was particularly large in services, with containment measures severely affecting contact-intensive activities. Relative to the pre-COVID forecast, the average annual loss in per capita GDP for 2020–21 is projected at 5.3 percent. While real GDP is expected to return to its pre-pandemic level this year, real GDP per capita will only do so in 2023.