Past the worst, but recovery to be uneven

After falling by around 6% q/q in Q1, world GDP looks set for an equally sharp slump in the second quarter. As major advanced economies are following Asia’s lead in easing containment measures, global activity has hopefully passed its trough. Manufacturing and construction sectors are back to work and there are signs of life in high-frequency indicators such as US gasoline demand and passenger journeys throughout DMs, as suggested by Apple map route searches. However, experience from China suggests that consumer demand is likely to be fragile for some time as people steer clear of shopping malls, restaurants and public transport. Lockdown measures may need to be re-imposed in some countries amid future outbreaks. And since unemployment has risen around the world, what may initially look like a V-shaped recovery seems set to lose steam, leaving activity below its pre-virus path for years to come.