The arrival of COVID-19 in early 2020 slammed global economic output. The world economy shrank by 3.4% in 2020. Massive relief provided by governments and super-low interest rates engineered by central banks — and eventually the rollout of vaccines — triggered an unexpectedly strong recovery last year.
But the speed of the rebound caught businesses by surprise. They have scrambled to find raw materials and supplies to meet customer demand and the ships, trains and trucks to transport them. Especially in the United States, they have struggled to find workers to fill job openings.
One result has been the highest global inflation rates since 2008. Central banks are now reducing their support for economic growth and considered raising interest rates to combat higher prices.
“The world economy is simultaneously facing COVID-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory,” World Bank President David Malpass said.