Global

Events over the last month demonstrate that COVID-19 remains a major factor influencing the global economy. The resurgence of the virus in parts of the globe – and the re-introduction of COVID-19 restrictions – will weigh on activity, but positive news regarding the development of a vaccine has buoyed markets as it offers the hope of a faster recovery down the track. There was a substantial, but incomplete, rebound in advanced economy activity in Q3 but a resurgence in COVID-19 cases across both Europe in particular, but also North America, will weigh on activity; Euro-zone and UK GDP is expected to decline in Q4. In contrast, economic conditions appear to be improving in Emerging Markets. We expect global GDP to decline by -3.9% in 2020, before rising by 6.1% in 2021. COVID-19 continues to spread and how authorities react remains a key risk to the outlook. Successful development and a speedy roll-out of a vaccine represents an upside risk.

This month we recorded a podcast to accompany the Forward View – Global, giving you a 10 minute summary of our key forecasts.
Listen to the full podcast now. If listening on a mobile device, click listen in browser. Alternatively, read NAB’s World on Two Pages November 2020 report

Australia

The RBA has lowered rates to a record low of 0.1% and announced a QE program, committing to buying $100bn of bonds over the next 6 months. This package of monetary easing, unprecedented in Australia, is aimed at reducing unemployment more quickly, a priority shared by the federal government’s JobMaker fiscal measures. That said, NAB’s forecasts are broadly unchanged since the 6 October Federal Budget, where we had already expected further monetary easing, including QE. For unemployment we continue to forecast a peak at 8.1% in Q1 2021, before declining to 5.9% by the end of 2022. However, large uncertainties remain. As the end of Melbourne’s lockdown kickstarts the recovery in Australia’s second largest economy, NAB’s business survey and other timely data show the recovery in other states is slowing into the Christmas period. Confidence remains fragile and businesses will need to be convinced of a sustainable recovery before increasing investment and hiring. Further fiscal support will be needed.

This month we recorded a podcast to accompany the Forward View – Australia, giving you a 10 minute summary of our key forecasts.
Listen to the full podcast now. If listening on a mobile device, click listen in browser. Alternatively, read NAB’s World on Two Pages November 2020 report