At what point is the global recovery?
In the third and fourth quarters, real world GDP should return to positive territory thanks to the easing of the lockdown. Comment by Jean-Pierre Durante, head of applied research at Pictet Wealth Management
The recent increase in Covid-19 cases has affected mobility. Since mid-June, inflows into public places have stabilized in both advanced and emerging economies. However, the daily rate of new infections globally is decreasing (1.3% g / d compared to 1.7% a month ago). This progress is attributable to both advanced and emerging countries.
HOW DO THE INFECTIONS GO
Beyond these generally favorable developments, some countries still record a significant increase in infections on a daily basis (Germany 2.9%, Spain 2.5%). On the other hand, positive news comes from countries recently affected by an increase in coronavirus cases: in Japan (1.6%), Australia (0.9%) and Switzerland (1.0%) infections are down compared to growth double-digit mid-July.
In the United States too, the situation appears more encouraging: the daily growth rate of 0.9% is lower than that of many European countries. The southern US states, the hardest hit, have rates below 1.6% and some even show a contraction.
In emerging economies, the picture is not homogeneous. On the one hand, there is a decrease in net cases in densely populated countries such as Russia (-0.5%), Brazil (-0.3%), Mexico (-0.6%) and South Africa (-1.8%) . There are also extremely low daily growth rates in states at risk, such as India (0.1%). On the other hand, some countries, especially Latin American, still have sustained rates on a daily basis.
WHAT THE DATA SAY ABOUT THE ECONOMY
In summary, we are still a long way from a solution, but the situation seems manageable. Although the recent increase in infections has imposed stricter social distancing measures, a new total closure of individual economies is highly unlikely.
The latest economic data seem to confirm that a recovery is clearly underway in the US, China and Europe. Overall, the surveys reveal renewed growth at the sector level, the data relating to production orders are encouraging and in the main exporting countries we are witnessing a gradual recovery of international trade.
These developments support our scenario of probable positive growth in world real GDP in Q3 and Q4 after the significant losses recorded in Q1 and Q2 (cumulative loss estimated for the first half of 2020: 9.4%). Therefore, we revise the forecasts for annual growth in world real GDP slightly upwards from -4.1% to -3.9%.
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This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ripresa-globale-a-che-punto-siamo/ on Sun, 30 Aug 2020 05:46:24 +0000.