Our global GDP forecast for 2020 has not changed significantly this month, ending the run of downgrades, but the pattern of growth has shifted. Still, the terrible start to Q2 means even greater losses in output from lockdowns are likely over the whole quarter.
The bad news has been counterbalanced by signs that activity has already begun to bounce back in May as lockdown restrictions have eased. Accordingly, we now envisage a faster pace of growth in Q3 than we expected a month ago.
While clearly good news, we think that this development merely brings forward some spending which we had expected to be delayed until later in the year. Indeed, we have downgraded our forecast for 2021.
Compared to the latest OECD forecasts, our own projections are a little more upbeat. A major reason for the discrepancy is the OECD’s rather more pessimistic assessment of the outlook for the Chinese economy.