Global Economic Forecasts: Q3 2020

Delivery

This report comes in PPT.

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).