Global economies are 'several quarters' away from returning to pre-pandemic levels, while China will likely get there by end-2020
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Shalini Nagarajan
Sep 7, 2020, 17:23 IST
PRAKASH SINGH/Getty
Economies around the world are still a long way off returning to pre-pandemic growth levels despite gradual pick-ups in the third-quarter, according to Amundi analysts.
China, the only exception, is expected to return to its end-of-2019 growth level by the end of this year.
Europe's biggest asset manager downgraded its global GDP 2020 economic forecast, predicting a contraction of between 3.5% to 4.7% year-on-year, from a prior estimate of 2.9% to 4.2%.
For 2021, GDP was "mildly revised" upwards to between 4.4% and 5.7%, from a prior estimate of 4.1% to 5.1%.
World economies are still "several quarters" away from returning to pre-coronavirus levels, although they have gained gradual rebounds in the third-quarter, according to European asset manager Amundi.
China is the only exception, and is anticipated to return to a full rebound by the end of this year.
"The bottom has passed, but economies do not seem to be climbing out of it quickly enough to ensure a fast healing," Amundi analysts wrote in a note.
A COVID-19 vaccine, expected by mid-2021, would restrain the enduring effects of temporary damages and support economic recovery through higher confidence in households and businesses, they said.
While new localized hotspots may not imply full-scale lockdowns, it could still indicate risks to a "smooth path forward."
The asset manager downgraded its 2020 economic forecast. Amundi predicts global GDP will contract between 3.5% and 4.7% year-on-year, from a previous estimate of 2.9% to 4.2%.
For 2021, GDP was "mildly revised" upwards to between 4.4% and 5.7%, from a prior estimate of 4.1% to 5.1%.
"After a robust post-lockdown rebound in activity starting around May and early June, the pace of recovery seems to have slowed and stabilized between July-end and August, and this is visible in both soft and hard data," Amundi said.
"The recovery curve based on (high-frequency-data) gauges of production activity, the labour market, and consumer sentiment has begun to flatten almost everywhere, without reaching pre-crisis levels, with very few exceptions."
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Data from China shows that the economy experienced continued recovery in its manufacturing and service sectors, and GDP in the second-quarter grew by 3.2%— a sign that it may be on track towards a V-shaped recovery and its darkest days from the pandemic might have passed.
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