Global Economics

Global Economics Chart Book

Global Economics Chart Book

Recoveries regaining pace after slow start to the year

Global GDP growth slowed sharply in Q1 as most parts of the world grappled with renewed waves of coronavirus. The US and Korea were among the few exceptions where recoveries accelerated. But with global infection numbers now falling, activity seems to be gaining momentum again. The Global Composite PMI rose to its highest level since April 2006 in May. What’s more, our high frequency COVID Mobility Trackers suggest that activity has risen sharply, particularly in Europe, as restrictions have eased. Other than in particular sectors such as motor vehicle production, there is little evidence so far that recent supply shortages are holding back output. But there are growing signs of inflationary pressure around the world, most notably in the US. Fears of higher inflation should prompt numerous central banks in emerging economies – especially in Central & Eastern Europe – to shift towards tighter monetary policy in the coming quarters. But central banks in major DMs will look through higher inflation this year and next.

11 June 2021

Global Economics Chart Book

Near-term inflation pressures mount

Near-term inflationary pressures appear to be building. Some of this reflects factors that are likely to be only temporary, such as the “reopening inflation” associated with the easing of virus-related restrictions. We also think the broad-based rally in commodity prices will go into reverse later this year. But there is a risk that shortages of commodities could constrain the production of goods and services, leading to a more broad-based rise in inflation. So far, there is most evidence of a rise in underlying price pressures in the US, which is consistent with our forecast of a prolonged upward shift in core inflation there.

17 May 2021

Global Economics Chart Book

Virus & vaccine setbacks push back timing of recovery

The world economy lost considerable momentum in the first quarter as resurgences of the virus and tighter lockdown measures weighed on activity. The lesson from Q4 last year was that households and businesses have adapted to lockdown measures to a significant extant and most industrial sectors have remained open for business, so individual economies should avoid large falls in output. But while the latest data show that the recovery in the US is being supercharged by a combination of fiscal stimulus and relaxation of restrictions, for much of the rest of the world, vaccine setbacks and worsening virus outbreaks will delay economic recoveries. The surge in virus cases in India has grabbed attention in recent weeks, but infections are on the rise in most parts of the world, especially in emerging economies.

16 April 2021
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Global Economics Chart Book

Divergence among advanced economies in Q1

Both the hard data and more timely surveys imply that the major advanced economies have had a mixed start to the year. The US has fared particularly well, thanks to easing pandemic-related restrictions and strong fiscal stimulus. Most notably, $600 stimulus cheques gave a strong boost to US retail sales in January, marking a stark contrast to the falls in sales in the euro-zone and UK which owed to renewed restrictions on the sector. Meanwhile, February’s PMI surveys revealed that the US composite index rose to a seven-year high, consistent with strong gains in GDP. But the PMIs for the euro-zone, UK and Japan all remained below the no-change level of 50. We estimate that US GDP will rise by a healthy 1.7% q/q or so in Q1, while Japanese GDP broadly stagnates, and the euro-zone and UK suffer renewed contractions.

Global Economics Chart Book

Early signs of a difficult start to 2021

Global growth slowed throughout the fourth quarter and most economies entered the new year on a weak footing. We have limited hard data for 2021 so far, but timely surveys and our high-frequency Mobility Trackers are generally consistent with a further loss of momentum in January. Infection numbers are now moving in the right direction, but this has prompted restrictions to be relaxed in only a handful of cases. COVID-19 deaths are still high and health systems remain under pressure, so the bulk of containment measures are likely to remain in place throughout Q1. Fortunately, given that most business services seem to have adapted to life under virus restrictions, the economic fallout should continue to be small compared to the falls in output seen in the first half of 2020. Indeed, the resilience of much of the services sector – especially in Europe – explains why Q4 GDP wasn’t quite as bleak as forecasters expected.

10 February 2021

Global Economics Chart Book

Vaccines won’t prevent a weak start to the year

While the economic fallout will not be as severe as it was with the first lockdowns, the surge in virus cases will weigh on activity in Q1. Vaccine rollouts should provide a boost to the global recovery, but not until the second half of the year. Headlines have (rightly) concentrated on vaccine developments. But one issue that has slipped under the radar is that headline inflation rates are set to surge in the next few months. Indeed, the contribution of energy price inflation to headline rates will spike in April as the fall in oil prices that occurred during the early stages of the pandemic enters the year-on-year comparison. But with core price pressures generally still subdued, policymakers should look through the rise.

Global Economics Chart Book

Divergences by economy and by sector, for now

Recent data confirm that global economic activity has continued to recover from the height of coronavirus restrictions in Q2. But while activity in China is now above its pre-virus level, there is still a major shortfall in other economies, including Spain and the UK. (See Chart 1.) What’s more, timely indicators suggest that recoveries across much of Europe have stalled in recent weeks as restrictions have been re-imposed. By sector, industry and trade have continued to make up lost ground, but retail and consumer services are suffering. The good news is that those economies and sectors now feeling the greatest strain should also experience steep catch-up recoveries next year as vaccines are rolled out.

10 December 2020

Global Economics Chart Book

Worse to come in Q4 despite vaccine hopes

Hard GDP data have confirmed that most economies saw sharp rebounds in activity in Q3 after the lockdowns of Q2. But monthly data suggest that the pace of improvement slowed during the quarter and the latest renewed tightening of restrictions in advanced and emerging Europe bodes ill for Q4. Indeed, we have already seen visits to retail sites weaken throughout Europe, especially in France. (See Chart 1.) The news of an effective vaccine is very encouraging, but this is unlikely to boost activity until next year. We still suspect that unemployment has further to rise in some economies as government support schemes are scaled back, which suggests that recent disinflationary tendencies will be sustained for some time.

11 November 2020
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