Global Economic Forecasts: Q3 2020

September 2020

In Q3 2020, global economic activity levels remain significantly below normal. Under the baseline forecast the global economy is headed for the worst global recession since the great depression of the 1930s, with global output set to contract by 3-6% in 2020. A relatively strong expected recovery in 2021, with growth of 3.5-7.0%, would still leave global output in 2021 around 5.5% below pre-COVID-19 forecasts.

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Global baseline outlook

In Q3 2020, global economic activity levels remain significantly below normal, despite the relaxation of the strictest Coronavirus (COVID-19) pandemic social distancing measures. Under the baseline/most likely scenario, the global economy is headed for the worst global recession since the great depression of the 1930s, with global output set to contract by 3-6% in 2020. A relatively strong expected recovery in 2021, with growth of 3.5-7.0%, would still leave global output in 2021 around 5.5% below pre-COVID-19 forecasts. Even in 2022, we expect global output in the baseline/most likely scenario to be around 4.5% below the pre-COVID-19 forecast.

The 2020 global GDP growth baseline forecast has been downgraded by 1.5 percentage points compared to the May forecast, with a 1.2 percentage point downgrade for advanced economies and a 1.7 percentage point downgrade for developing economies. This mainly reflects the worse than expected economic effects of the pandemic in Western Europe, India and Latin America (which emerged during the summer as a new major centre of the pandemic).

The pandemic has worsened in developing economies, leading to greater than expected hits to economic activity in countries with big informal sectors and less scope for social distancing. The August forecast also assumes more persistent social distancing effects in H2 2020, and more adverse effects on productivity of businesses’ adaptations to reduce COVID-19 infection risks (eg more resources devoted to hygiene and social distancing measures). 

Global Outlook

Global baseline outlook
Downside risks remain important in the most likely baseline forecast
Real GDP annual growth forecasts and revisions from last quarter, AE (%, percentage points)
Real GDP annual growth forecasts and revisions from last quarter, EMDE (%, percentage points)
Inflation quarterly forecasts, %
Central Bank interest rates quarterly forecasts, %
Global risks map
Global Risk Index scores and rankings
COVID-19 scenarios summary
COVID-19 Pessimistic1 scenario: Highest probability downside risk scenario
COVID-19 Pessimistic2 scenario: Top downside risk scenario

The US

General outlook (1)
General outlook (2)
Forecast risks
Private sector confidence and consumption
Labour markets

China

General outlook
Forecast risks
Short-term economic activity and private sector confidence (1)
Short-term economic activity and private sector confidence (2)

India

General outlook
Forecast risks
COVID-19 impact to consumer spending and income

Japan

General outlook
Japanese economy is likely to remain below 2019 level for the coming years
Japanese debt to exceed 250% of GDP

The Eurozone

General Outlook (1)
General Outlook (2)
Forecast risks
Economic activity and private sector sentiment

The UK

General Outlook
The British economy faces significant downside risks

THe UK

Unsuccessful Brexit negotiations would significantly prolong the recovery

Russia

General outlook
Forecast risks

Brazil

General outlook
Forecast risks

Notes

Scope and Objectives
Definitions
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