Investment outlook

2021: Global Economic Outlook

Adam Burton
Adam Burton
Senior Economist
JG Global Economic Outlook 2021
Key takeaways
1
1
The impact and duration of successive lockdowns and the associated economic damage done to economies.
2
2
The scale and design of the economic stimulus policies applied during the health crisis.
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3
How quickly an effective vaccine can be developed and distributed globally to combat the virus.

With major European economies such as Germany, France, Italy, Spain and the UK all embarking on new nationwide lockdowns (as opposed to local lockdowns), and the US experiencing new records in daily infections, there is no immediate relief in sight for these economies.

This means that the fourth quarter of 2020 may well see declines in real GDP, to be followed by an uncertain trajectory in 2021. The year ahead could include a weak first quarter in the northern hemisphere while the virus persists, to be followed by relatively strong bounce-backs through the second and third quarters, especially if a vaccine becomes widely available. The recoveries in 2021 will likely be boosted by the huge monetary and fiscal stimulus policies adopted by central banks and governments across the developed world.

Once the return to normality is widely perceived to be under way with consumers and service businesses regaining confidence, we expect a significant transformation of the economic environment - in striking contrast to the aftermath of the GFC when recovery was sub-par and anaemic for a long period. This means that consumption, investment and employment are all likely to recover at a much more rapid pace than after a typical recession, generating a surprisingly strong bounce-back.

Please download the PDF for the complete outlook.

John Greenwood's Economic Outlook 2021
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