Rising global Covid infections remain a key focus, but the recent surge is not automatically grounds for us to slash our near-term forecasts. Indeed, the strength of the initial business and consumer surveys in April potentially lessens the downside risks to the near-term economic outlook.
Vaccine developments over recent months have also clearly reduced uncertainties. Over the past six months, we have pushed up our forecasts for the level of global GDP by the middle of the decade, albeit to a lesser degree than the IMF. But the fund’s especially large revisions compared to ours reflect its previously more pessimistic assessment of the medium-term outlook.
We maintain our view that emerging markets will suffer greater medium-term scarring than advanced economies. But the gap could be narrowed if the pace of vaccine production allows for faster than anticipated rollouts in EMs.