The end of the beginning, not the beginning of the end

End of beginning pathway

It is becoming clear that the global recovery from the COVID-19 recession began in May. Widespread, albeit still incomplete, success in slowing the spread of the virus has prompted most governments to begin easing lockdowns over recent weeks, following China’s earlier lead. That has led to broad-based improvements in business and consumer confidence, alternative indicators like restaurant bookings and traffic congestion, as well as the timely hard data like US non-farm payroll employment and retail sales.

Because the relaxation of social distancing came earlier than we anticipated, our 2020 growth forecasts are now higher than we feared back in April (see Chart 1). Whereas then we thought the global economy would shrink by close to 9% this year, we now think it will closer to 7%. The labour market fallout is also likely to be more moderate than we initially feared, as short-hours and furlough schemes have led to smaller increases in unemployment than otherwise implied by the depth of the recession.

But as welcome as this early start to the recovery is, the scale of the damage done should not be forgotten

View Full Article – published by Aberdeen Standard Investments on 10th July 2020