Economic activity has rebounded sharply as economies are re-opening. Most governments in Asia, Europe and the US have eased virus containment measures significantly and economic data have surprised on the upside in June. Global mobility has rebounded sharply, and our mobility-based SRI GDP shortfall index shows that most developed markets have returned to above 90% of pre-crisis economic activity, with the GDP shortfall in G7 standing at around -7.5%. We expect the economy to improve further in 2H 2020, albeit at a slower pace.
Economic activity has rebounded sharply from its April lows. Going forward we expect the pace of the global recovery to moderate.
An acceleration of new infections exposes downside risks and is a reminder that there will be no return to full normality anytime soon.
Some fiscal stimuli are waning, and we expect additional fiscal measures to be announced in Q3.
We have downgraded UK and Japan 2020 GDP to -8.5% and 4.7% and revised up our Euro area growth outlook for 2021 to 4.8%.
Downside risks remain elevated, despite recent upside surprises on the macro front.