USD 1.9 trillion of fresh US fiscal stimulus is a strong growth tailwind and we revise up our forecasts.
Alongside accelerating vaccine roll-out, the stimulus package will provide substantial support for the recovery. However, we expect headline inflation to increase significantly globally in the first half of 2021 due to base effects from last year’s low oil prices and the transitory inflationary impact of the US stimulus. Medium-term inflation risks have also increased, since central banks worldwide are likely to tolerate higher inflation for some time.
The USD 1.9trn fiscal stimulus in the US is a strong tailwind for GDP growth but increases inflation risk. We revise up both forecasts.
The UK's ambitious re-opening schedule is setting the pace in the advanced world. All UK restrictions are expected to be lifted by 21 June.
A third vaccine in the US will help expand supply and accelerate the roll-out.
Risks to the global outlook are balanced, with further pandemic setbacks the dominant global near-term risk.