Global real GDP growth was weaker than expected in 3Q21 as supply constraints caused a greater share of nominal demand growth to feed into higher prices. Shortages of semiconductors have resulted in large falls in autos production in the US and Germany. Consumer and producer prices continue to rally, driven by soaring commodity prices as well as supply-chain bottlenecks in global goods markets.
Weaker-than-expected 3Q21 GDP qoq outturns in some of the major Fitch20 economies reflect supply shortages in global manufacturing, which have partly offset the benefits of services sector re-opening as the coronavirus vaccine rollout has progressed. US GDP grew 0.5% qoq (not annualised) compared with Fitch’s 1.6% September 2021 GEO forecast. This was despite nominal US GDP expanding by a solid 1.9% qoq in 3Q21.
Both Germany and Spain also saw weaker-than-expected real GDP growth in 3Q21 at 1.8% and 2.0%, respectively (September GEO: 3.1% and 2.6%). However, this was more than offset at the eurozone aggregate level by positive surprises in France and Italy – eurozone GDP grew by 2.2% qoq, compared with 2.1% in the GEO. China’s economy grew by 4.9% yoy in 3Q21 – slightly stronger than our 4.8% September forecast, but fixed-asset investment and housing starts and sales have weakened sharply recently.
Consumer and producer price inflation rates have increased across the board in recent months, which has prompted many emerging-market central banks to hike rates, including Brazil, Russia, Korea, Mexico and Poland, although Turkey recently bucked this trend.
