World Economies Are Yet To Reattain Pre-Coronavirus Levels
The worst of the economic blow dealt on economies globally by the coronavirus pandemic seems to be over but, they are still quarters away from attaining their pre-coronavirus economic status, according to Amundi Asset Management.
Analysts from Amundi speculate that economic performance is likely to progress along “a gradual upward” sloping catch-up process. Such a scenario would also propel performance to levels that haven’t been attained prior to the covid-19 epidemic, likely to occur a few quarters away.
Analysts believe that the worst of the performance at the base level has passed. Thus, they added that economies are dragging themselves through the recovery.
“The bottom has passed. But economies do not seem to be climbing out of it quickly enough to ensure fast healing,” observed the analysts.
Global GDP to Contract[u1] By 3.5% To 4.7%
The slow growth has forced Amundi to revise its initial global Gross Domestic Product (GDP) for 2020. It was revised from 2.9% and 4.2% to a higher projection of 3.5% and 4.7%. Additionally, the GDP forecast for 2021 has been mildly adjusted from 4.1% and 5.1% to 4.4% and 5.7%.
According to Amundi, indications on hard and soft data show a robust period of growth after a gradual reopening in May and June. Then, followed by slowed growth between the end of July and August.
“The recovery curve based on (high-frequency data) gauges of production activity, the labor market, and consumer sentiment has begun to flatten almost everywhere, without reaching pre-crisis levels.” The analyst deducted.
Based on the huge loss that the global economy incurred in the first half of 2020, analysts are now warning about the third quarter. It doesn’t seem economic recovery will be adequate to bring most of the economies back to their pre-pandemic levels soon.
China’s An Exceptional Case
The world’s second-largest economy will probably be the exception for better economic news. According to Amundi, China’s end of 2020 growth will most likely reach the end of 2019 growth levels.
As the breakout point of the coronavirus, China was the first to implement strict measures to curb the spread of the virus. As a result, China has dealt with the pandemic for the longest period.
Recent data now indicates that China has experienced a continued period of economic recovery in some of its key economic areas. Some sectors include the services sector and manufacturing.
Meanwhile in Australia, new data for the second quarter GDP progress indicates the extent of damage to its economy. The country announced Wednesday that it has officially entered into a recession, which marked the end of its economic growth run. Australia’s economy shrank by 7% in June quarter following a 03% contraction in March.
“Today’s devastating numbers confirmed what everyone know. Covid-19 has wreaked havoc on our economy and our lives like nothing we have ever experienced before. But there is hope, and there is a road out,” said Australian Treasurer Josh Frydenberg.
In the US, economy shrinkage reached 32.9% in the second quarter. While, the UK is in recession after shrinking by 20.4%.
