Global Recovery Tracker: Q4 2020

Key Findings

The spread of COVID-19 continues to accelerate in Q4 2020

The end of 2020 is seeing the emergence of regional second waves, especially in Europe and North America. The Eurozone and UK economies have had to resort to new lockdown measures to control fast-rising infection rates. The baseline forecast assumes these second waves are contained in Q4 2020, and widespread vaccine deployment occurs around mid-2021.

Russia, the UK and the US are the first countries to start distributing vaccines

Already, before mid-December 2020, Russia, the UK and the US will have started distributing vaccines. The EU is likely to follow soon. The vaccines will initially be administered to medical staff and the most-at-risk population groups. The start of vaccine distribution is the start of the end of the pandemic, which is already in sight; however, major logistical hurdles to global vaccine distribution remain.

The US and German economies are expected to recover by the end of 2021

Economic recovery is likely to be swift once the social distancing effects fade. Therefore, we expect economies to start fully recovering as widespread vaccine distribution (which is assumed to be implemented around mid-2021) creates herd immunity. As the probability of widespread vaccine distribution in 2021 rises, so the economic outlook will improve.

Consumers continue to cut back on spending

Social distancing and lockdowns continue to negatively impact the retail sector, as individuals cut back on their in-store shopping. On top of this, uncertainty about the path of the pandemic continues to make individuals wary about spending on big ticket items, and raises precautionary savings. From high-frequency indicators, we see that these effects increase with the current rise in infections; however, not to the same magnitude as during the first wave of the pandemic.