Although the US election results have not triggered a significant change to our assessment of the US or global economic outlook for 2021, double dips in Europe due to the imposition of second lockdowns have prompted us to lower our global GDP growth forecast for next year again, from 5.2% to 4.9%.
The good news is that the contractions in activity in Europe will be far smaller than in Q2. However, we also expect the lost ground to be regained more slowly than after the first lockdown as households and firms become more sceptical that there will be a quick end to Covid-related restrictions on activity.
The positive news on vaccine trials this week could provide some upside to growth in early 2021, depending on the speed with which inoculations can be carried out. But concerns that minks may have passed on a new strain of Covid19 to humans that might render the current wave of vaccines ineffective illustrates that the path to normality with at the very least prove bumpy.