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.