- The spread of COVID-19 into a global pandemic has significantly impacted global economic activity in the first half of 2020.
- All countries are being impacted, with falls in business activity and global economic output falling significantly sharper than during the financial crisis.
- However, across countries there are differences in pace, reflecting differences in economic structure, approach to tackling the health crisis, and economic support packages.
Falls in global output have been unprecedented in 2020.
- Euro Area GDP fell by 11.8% in Q2 2020, following a 3.7% fall in Q1, while US GDP fell by 9.1% in Q2 2020, following a 1.3% fall in Q1.
- The falls in output have also impacted on global trade with world trade volumes falling 10.5% in the first half of 2020.
Global business activity has showed signs of recovery.
- Following sharp contractions in business activity, the Global PMI business survey has reported a pickup in activity as economies reopened.
- However, the PMI signalled further falls in employment numbers in August, suggesting labour market challenges are continuing to emerge.
- The IMF projects consumption and investment to recover in the second half of 2020, however to remain subdued until 2021.
- The OECD reported that household spending has started to pick up in June/July, however spending on services remained subdued.
However, the economic outlook remains highly uncertain.
- The global outlook is dependent on the evolution of the pandemic and ongoing measures to ensure public health.
- The IMF projects global output to fall by 4.9% in 2020 before growing 5.4% in 2021 (assuming a gradual recovery in activity starts in the second half of 2020).
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