Despite the global economy having performed strongly in the first half of the year, global economic activity has peaked and is starting to face several headwinds, says financial risk management, solutions and insights company Fitch Solutions Country Risk and Industry Research (Fitch Solutions) global head Cedric Chehab.

The firm expects to see above trend growth of 5.6% this year for the global economy and 4.2% in 2022.

“This means the global economy will see two strong years of growth, after which it will return to trend in 2023,” he says.

Leading the current economic recovery are emerging countries in Asia and Latin America.

Chehab says a significant volume of the outperformance of emerging markets is a result of Asia – a region that will outperform both this year and next – growing by about 7.8% this year.

He adds that Latin America will also be a fast-growing region this year as it recovers from a steep contraction in 2020 and being buoyed by commodity prices that have provided a tailwind and continue to boost growth in the region.

In contrast, Chehab says sub-Saharan Africa will underperform with a modest rebound of about 3.2%, given low vaccination rates and ongoing structural challenges.

While third-quarter data, yet to be released, will likely see growth slow, several economies will exceed their pre-Covid-19 pandemic levels this year and in 2022, he states.

According to Fitch Solutions’ forecast, major markets that will see output growth exceed 2019 levels this year include China, Turkey, South Korea, the US, Poland, Indonesia, India, Brazil and Russia.

However, Saudi Arabia, Germany, the Eurozone, France, Mexico and the UK will only see output return to pre-pandemic levels in 2022, while Italy and South Africa may take a little longer to reach that target.

However, Chehab says Fitch Solutions notes some upside risk to its forecast for Italy and South Africa, which could see output rebound to 2019 levels by next year.

A key driver of the recovery is the significant policy support that has been in place, both from a monetary and fiscal perspective, he says.

But equally, if not more important, Chehab says the ongoing vaccination drive has led to many economies reopening.

And, while vaccination programmes are still very uneven, he says vaccination rates, on average, have been rising very sharply in recent months, resulting in a large share of the world’s population receiving doses.