Global Economics Intelligence executive summary, November 2021

Industry indicators are broadly positive alongside persisting inflation; pandemic restrictions return to Europe; nations recommit to ambitious climate goals.

Most global indicators of economic activity show positive momentum; gains in industrial output were measured in September and October, trade momentum was sustained, and the near-term outlooks in manufacturing and services, as indicated by global and individual purchasing managers’ indexes (PMIs), were almost uniformly positive. The global PMIs, for example, edged up for manufacturing, to 54.3, while for services the PMI jumped to 55.6. In China, industrial activity improved to 3.5% year over year in October (3.1% in September). This pace is still somewhat slower than prepandemic norms, but improvements were measured in all major sectors, including mining (6.0%), manufacturing (2.5%), and utilities (11.1%).

In the United States and the eurozone, where the pace of expansion in manufacturing has been the fastest, some industry moderation was measured in October as the effects of inflation took hold. Consumer inflation accelerated in both economies, climbing above 6% in the United States and 4% in the eurozone year over year (Exhibit 1).

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Midterm inflation expectations, as reflected in five- and ten-year T-bills and TIPS of the same maturity, reached 3% in the United States (Exhibit 2). 1 Against this backdrop, President Biden nominated Jerome Powell to a new term as chair of the US Federal Reserve; confirmation is expected, as Powell has bipartisan support. The Fed has begun cautious tapering of its bond-buying program, but analysts suggest that the bank may now accelerate steps to control inflation. According to most forecasters, investors have already priced in interest-rate hikes in 2022.

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The European Central Bank (ECB), meanwhile, decided to keep its bond-buying stimulus efforts in place, after suggesting that some tapering would come in the final quarter of 2021. ECB president Christine Lagarde restated the position that the inflationary spike, along with supply disruptions and higher energy prices, would be short lived. She also revealed that the stimulus program would end in March 2022.

Notable resilience was demonstrated in both the US and eurozone economies in November, when the manufacturing PMIs again recorded faster expansion, with respective readings of 59.1 and 58.6 (versus 58.4 and 58.3 in October).

Accelerating prices have disrupted recovery most sharply in Russia and Brazil, where consumer inflation hit 8.1% and 10.7%, respectively, in October. Both central banks have raised interest rates several times throughout the year. Fortunately, producer-price inflation, which has been very high, has lately leveled off as some supply dislocations work themselves out.

Prices remain elevated across categories, however. The prices of energy and agricultural products continued to rise, while industrial-metals prices leveled off in October. Oil prices exceeded $80 per barrel (Brent) as rising demand outpaced production. Prices did experience higher volatility at the end of November as renewed pandemic fears were reflected in markets. Consumer-confidence indicators were lower in October, but retail sales improved, especially in the United States.

In national data, trade mainly improved, with values exceeding prepandemic levels. In the most recent global reading, the Container Throughput Index, a measure of around 60% of container traffic, rose to 124.8 in September, a record high (it was 123.7 in August) (Exhibit 3).

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In October, the unemployment rate was stable in China (4.9%); it has lately trended downward in the United States (4.6%), the eurozone (7.4%), Russia (4.3%), and even Brazil, where, however, it is still very high at 13.2%.

Equity markets have been somewhat volatile, and performance has been mixed across surveyed economies in October and early November. Currencies in developing economies lately strengthened against the dollar, while the euro has weakened. Volatility indexes for equities and gold climbed in October and November, while bond yields in most markets have been on the rise.

According to Our World in Data, 54.2% of the global population had received at least one dose of vaccine for COVID-19 by November 29, but in countries defined by the World Bank as low-income countries, the corresponding percentage is only 5.8%. 2 The number of new cases has been on the rise again since early October, especially in the United States, Russia, and Europe. In a number of European countries, new pandemic restrictions are being imposed to control the spread. Austria has gone into full lockdown and has made vaccination mandatory for the entire population. On November 26, authorities recorded more than 72,000 new cases in Germany, 34,000 in Russia, and 21,000 in the Netherlands.

From October 31 to November 13, representatives from nearly 200 countries met in Glasgow, Scotland, for the 26th UN Climate Change Conference, known as COP26. Participants formally reaffirmed international commitments to the main goal of the 2015 Paris Agreement, which is to limit global warming to 1.5°C (2.7°F). At least 450 financial institutions participated, pledging to align their portfolios (valued at $130 trillion) to net-zero emissions by 2050. Designing detailed pathways to these goals—which imply deep reductions in global greenhouse-gas emissions in the coming decades—is proving to be extremely difficult. The share of fossil fuels in global energy production is 80%, about what it was a decade ago. The necessary transformation will be possible only if the global economy’s productive asset base is replaced at scale with nonemissive technologies.

The capital needs for this historic undertaking are enormous. Success depends on the ability of governments and financial institutions to keep capital flowing to emissive industries engaged in decarbonizing activities, while redirecting funding away from activities that do not support the 1.5°C ambition. A recent episode in China may suggest the kinds of difficulties that large economies are facing. China is now the global leader in the generation of wind and solar power, with 299 gigawatts and 282 gigawatts of installed power, respectively. The share of renewables (including hydropower) in China’s power generation is now above 40%; total output from renewables is the highest in the world. 1 China has also signaled its intention to reduce coal consumption at power plants. Power shortages over the past several months, however, still had to be remedied by emergency increases in coal supplies.


McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the world economy. Each monthly release includes an executive summary on global critical trends and risks, as well as focused insights on the latest national and regional developments. View the full report for November 2021 here and here. Detailed visualized data for the global economy, with focused reports on selected individual economies, are also provided as PDF downloads on McKinsey.com. The reports are available for free to email subscribers and through the McKinsey Insights app. To add a name to our subscriber list, click here. GEI is a joint project of McKinsey’s Strategy & Corporate Finance Practice and the McKinsey Global Institute.

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