Global economies are 'several quarters' away from returning to pre-Covid levels - except for China
- 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%.
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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 localised 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."
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.
Conversely, other economies saw record declines in the second quarter with the US shrinking by the most since World War 2 at 33%, the UK entered recession for the first time in 11 years, when GDP plunged by 20.4% and the eurozone shrank by 12.1%.
South Africa's second-quarter GDP will be released on Tuesday, and the Reserve Bank expects that the economy shrank by a third during the three months to end-June – the height of SA’s stringent lockdown period - while even the most optimistic economists can’t see a decline of less than 20%.
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