Macroeconomic development

Global economic growth was hard hit by the coronavirus pandemic in 2020. The rapid spread of the virus and the subsequent sweeping restrictions imposed on social and economic activities to contain the pandemic led to a downturn of historic proportions in the early part of the year as a result of the first wave of infections. According to estimates of the International Monetary Fund (IMF), global growth for 2020 as a whole will fall to minus 3.5 %. This projection is 0.9 percentage points up on the previous forecast, reflecting the economic trend in the second half of 2020. Following the global economic downturn in the first half of the year, the global economy recovered more strongly than expected in the period up to autumn 2020. This economic upturn was then slowed by a second wave of infections, new mutations of the virus and renewed lockdown measures. Unlike in spring, however, there has been no major negative impact as yet on the manufacturing sector, international trade or commodity prices. Nevertheless, the 9.6 % drop in global trade volume for 2020 reflects the economic downturn brought about by the pandemic.

Development of gross domestic product (GDP)

in %







- 3.5



Advanced economies


- 4.9





- 3.4



Emerging economies


- 2.4










- 3.6





- 7.2



Central and Eastern Europe (emerging european economies)


- 2.8





- 5.4



World trade


- 9.6



Source: International Monetary Fund (IMF), January 2021

The extent of the pandemic and the recovery from it varies significantly by region. The advanced economies were generally able to adopt expansive fiscal measures to support households and companies, thus mitigating the loss of income caused by the pandemic. The central banks supported these measures by expanding bond purchasing schemes and, in some cases, by lowering interest rates. The total economic performance of the industrialised nations decreased by 4.9 % in 2020. The US economy experienced its strongest downturn since the Second World War, although the 3.4 % decline in gross domestic product (GDP) was relatively modest by international standards. The considerable impact of the pandemic and the associated lockdown measures can be seen most clearly in Europe: the IMF expects a decline of 7.2 % for the eurozone economy.

The emerging economies were also slowed by the pandemic, but their growth contraction of 2.4 % was comparatively mild. This is primarily due to the early and effective action to contain the pandemic taken by China, where the coronavirus originated. In the world’s second largest economy, activity already began to return to normal in large parts of the economy in the second half of the year, enabling it to regain some of the ground lost. The Chinese economy was the only economy to record positive growth for 2020 of 2.3 %.

By contrast, the Russian economy shrank by 3.6 % in 2020. In Ukraine, the economy is expected to contract by 7.2 % (IMF, October 2020). The Estonian economy is forecast to shrink by 5.2 % (IMF, October 2020). In Central and Eastern European member states of the European Union, where infection rates were relatively low in spring, the economy was hit by the dynamic growth in case numbers caused by the second pandemic wave. The nationwide restrictions to contain the pandemic are likely to result in an abrupt end to the upward trend in summer and to a decrease in GDP. As a result of the pandemic and the associated social and economic restrictions, the German economy slid into a deep recession. Economic output shrank by 5.4 % in 2020.