Economic and Strategy Viewpoint - June 2020

  • We are downgrading our forecast for global growth once more to reflect the weakness of the first quarter. Activity remains weak, but there are signs we are past the worst and a bounce back in activity is expected in Q3.
  • However, beyond this point uncertainty abounds. Forecasting the economy has become a judgement on the speed with which lockdowns are lifted around the world and the subsequent path of the virus. Our central view is that the virus is contained, but epidemiologists stress the risks of a second wave of infection.
  • Meanwhile, governments need to rein in fiscal support and after pent-up demand has been satisfied the pandemic is likely to make households more cautious. Business is also expected to be hesitant in resuming capital spending and like government will look to reduce debt levels.
  • The recovery is tempered as a result and such scarring effects mean we do not regain pre-Covid levels of activity by the end of 2021, making the forecast less of a V shape and more of a U.  

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Economic and Strategy Viewpoint - June 2020 15 pages | 577 kb