The next phase of the V
It will be about returning to where we would have been sans the Covid-19 shock and it may be reached by the middle of next year.
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THE plunge in global economic activity in March was followed by a supercharged recovery from May, helped by the restart of economies and the opening of floodgates of monetary and fiscal stimulus. This rapid turnaround, which defied consensus expectations, means our forecast that global GDP will reclaim its pre-Covid-19 levels in Q420 remains on track.
We have maintained a constructive view on the global macro outlook throughout the year. Our thesis has been that Covid-19 is an exogenous shock; private sector balance sheets and the financial system were in good shape coming into this recession; and the policy response was timely, coordinated and sizeable.
Private sector risk appetite, key to driving and sustaining any economic recovery, has not been as badly impaired as consensus had feared. Case in point: we are seeing early signs of a revival in the global capex cycle. The recent news on vaccines and antibody treatments will bolster private sector confidence heading into 2021.
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