December 10, 2020

The Forward View – Global: December 2020

Widespread rebound in Q3 GDP, but COVID continues to disrupt global economy.


  • GDP increased strongly across all the major advanced economies (AEs) in Q3, but growth is expected to slow markedly, and in some cases go into reverse, in Q4 due to the re-introduction of restrictions to control COVID-19. The spread of COVID-19 remains a key risk to the outlook. While on a positive note the number of new cases in some European countries has turned down, numbers remain elevated in other AEs.
  • There was a sizeable economic recovery in Emerging Markets (EMs) in Q3, with the five largest economies growing by 0.4% yoy (compared with a 4.9% contraction in Q2). More timely data point to a continued improvement in economic conditions in Q4.
  • Despite the impact of the COVID-19 related restrictions in Europe and elsewhere, global business surveys showed little change in November, pointing to the global recovery continuing (albeit with regional variation). With many of the recent restrictions targeting hospitality and social interaction, the services sector global PMI eased a little, but at the same time the manufacturing PMI moved higher. Nevertheless, we expect there to be a slowdown in the global recovery in Q4 2020 (with downside risks around Q1 2021).
  • Ongoing economic disruption is likely until an effective COVID-19 vaccine has been widely deployed. On this front, news continues to be positive; the UK this month approved a vaccine for use and US regulators are expected to make a decision soon. Progress on vaccines has supported financial markets.
  • Our global forecast for 2020 is unchanged at -3.9% but we have lowered our forecast for 2021 to 5.8% (from 6.1%). While COVID-19 spread remains a downside risk, a rapid roll-out of a vaccine is an upside risk.

For further details, please see The Forward View – Global December 2020