Global economies resumed growth yet the recovery pace is uneven: Global mobility remains substantially below normal levels while our mobility-based SRI GDP Shortfall Index shows GDP shortfall in G7 further improved to -7.0%. The July global manufacturing PMI is indicating higher activity levels going forward, albeit from a lower level. However, the global recovery is uneven – the Chinese economy expanded 3.2% yoy in 2Q20 whereas the US and Euro Area contracted by -9.5% and -12.1% yoy respectively. This is also reflected in the divergent pace of easing containment measures across markets.
Q2 GDP confirmed an unprecedented hit to the global economy by COVID-19 shock, while the pattern confirms our expectation that China will recover first, followed by the US and Euro Area.
Leading indicators suggest global economic activities have resumed growth momentum in July, albeit from a lower level.
The pace of recovery is uneven across markets, whereas China is leading the way.
Additional fiscal measures are needed to safeguard economic recovery and we expect more to be announced in Q3.
Ongoing structural changes include the upcoming Fed policy framework review and the joint Eurozone recovery funds.
We keep growth forecasts of major markets unchanged.
Balance of risk remains to the downside. US fiscal stimulus uncertainty and US-China trade tensions are key to watch.