Coronavirus Watch: Outlook for Q4 dims

GDP data will reveal record-breaking growth rates for many economies in Q3. But we see clear signs that the recovery has faded through the quarter and that growth in Q4 will be markedly weaker.

Rising cases of Covid-19 in many economies have already prompted a retightening of social distancing in some areas and heightened the risk of similar measures elsewhere. Still, we expect the hit to activity from these moves to be much smaller than that recorded in March and April.

But recent events may lead many firms to determine that further costcutting measures and redundancies will be needed to survive the next few months. Others may conclude that another six months of restrictions is an insurmountable obstacle and close down.

The fairly moderate tightening in restrictions so far also raises the risk that the R rate remains above one and that more severe and longer-lasting restrictions will ultimately be required, inflicting greater economic damage.

Topics: Coronavirus