Lessons from Q2 and the recovery so far

Data for Q2 revealed widespread drops in GDP, but the extent of the damage varied markedly depending on the length and severity of lockdowns. Recoveries since then have followed the same pattern. Looking ahead, Asian economies including China and Korea should continue to outperform given their success containing the virus. But uncontrolled outbreaks in India and Latin America will see them lag behind.
Jennifer McKeown Head of Global Economics Service
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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 Update

How concerning is the recent rise in inflation?

A rise in inflation was always likely to happen this year as economies re-opened and energy prices recovered from last year’s sharp falls. But in the US in particular, the increase since the start of the year has exceeded even our relatively strong expectations. While this might primarily reflect transitory factors, we continue to think that the risk of a sustained rise in inflation is bigger in the US than in other developed economies.

10 June 2021

Global Economics Update

G7 tax deal encouraging sign for cooperation among DMs

The direct implications of this weekend’s deal on global corporate taxation struck by G7 finance ministers will be limited. But the deal suggests that wealthy nations have found renewed determination under a Biden presidency to cooperate on global issues, which may pay dividends in other areas in years to come.

7 June 2021

More from Jennifer McKeown

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Will vaccine hesitancy prevent economies reopening?

There are signs that countries whose rollouts are advanced have hit something of a limit, with the remaining population now reluctant to be vaccinated. But this will not necessarily prevent economies reopening once the vulnerable are vaccinated. Potential vaccine-resistant strains are the bigger threat. Recent weeks have seen a slowdown in vaccinations in several economies due to a reduction in…

28 May 2021

Global Economics Update

US pay pressures are the exception, not the norm

While pay growth has risen across the developed economies, in several cases this reflects reduced hours or the fact that a disproportionate number of low paid workers have lost their jobs. There are clear signs of labour shortages in the US, but for now at least it is the exception rather than the norm.

20 May 2021

Global Economics Update

Monitoring inflation as economies open up

In this Update, we outline the key data that will help us gauge the evolution of inflationary pressure in advanced economies as they open up. Pandemic-related distortions mean that it is particularly important to understand the detail to distinguish temporary effects from a more sustained rise in price pressures. The new Inflation Dashboard in our data platform CE Interactive allows clients to do just that.

5 May 2021
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