As we previously warned, our latest economic forecast contained a downward revision to global GDP growth in 2021.
In comparison to a month ago we now expect weaker GDP growth from Q4 2020 through to Q2 2021, reflecting the continued need for social distancing measures to limit the spread of Covid-19.
Previously we had assumed that some relaxation of social distancing measures would commence in early 2021 based on medical developments, such as a vaccine for the disease. However, we now judge this to be an over-optimistic assumption and have revised down our forecast for 2021 GDP growth from 5.8% to 5.4%.
Despite the forecast revision and the assumed longer and slower transition to normality, we still expect the average quarterly pace of growth in 2021 to match that seen in the early stages of the recovery after the global financial crisis. Risks to the forecast still lie firmly to the downside though.