The Forward View – Global: July 2020

Global recovery continues but virus outbreaks a major risk.


Our podcast series to accompany the NAB Forward View – Global continues, giving you a 10 minute summary of our key forecasts this month. Listen now.


  • The recovery in the global economy that started in May continued through June. Activity indicators for May and June improved as did business survey readings. Nevertheless, we still expect to see the biggest contraction in annual growth since at least the early 1950s and most likely since the Great Depression.
  • The broadly improving trends for the global economy have generally resulted in stronger conditions in global financial markets, although financial conditions still remain tighter than pre-COVID-19.
  • We expect that the trough in global economic activity will be in Q2, with a substantial rebound likely in Q3 barring a significant re-introduction of COVID countermeasures. In annual terms, the global economy is forecast to contract by 3.6% in 2020 (previously -3.7%), before increasing by 6.0% (was 6.2%) in 2021. in 2022 we expect the recovery to continue, with growth of 3.9%, modestly above its (pre-COVID) average of recent decades.
  • A key risk to this outlook is renewed outbreaks of COVID-19 (as is occurring in the US) or uncontained outbreaks (e.g. Latin America, India) and re-imposition of restrictions (or delays in their removal). A reimposition of at least some restrictions has already occurred in some countries, such as in parts of the US, India and China, although as yet there has not been a repeat of the (essentially) nationwide shutdowns seen earlier. That said, the situation is fluid and this could change, and so virus developments remain a key risk.
  • This will weigh on business and consumer confidence, and is one reason we expect that a full recovery from the global recession will take time for many countries. The fallout from the virus for travel, increased online shopping and work from home also points to large scale structural change. Moreover, other global risks remain in place – particularly around trade – which may cause firms may re-evaluate their supply chains, adding to the disruption to economies.

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