Global Macro Service > Global Macro Themes And Asset Views Chartbooks
In our global macro chartbook for August, we summarise our views on current global themes and asset markets, and link to our research highlights over the last month. Given the scale of recent revisions, our global GDP forecast remains relatively unchanged at -4.4% in 2020. This is the weakest rate since WWII and long-term scarring from the Covid-19 pandemic is highly likely.
We highlight our research on the impact that the ongoing global coronavirus outbreak will have on the global economy. The next decade will see both world trade growth and the ratio of trade to GDP growth at their lowest levels over a 10-year period since WWII, accelerated by Covid-19 shortening supply chains and reshoring. Historically, pandemics can trigger a rise in inequality, even over medium-term periods and Covid-19 will likely be no different as confidence for using in-person services will be damaged, which disproportionately exposes low-skilled work to displacement. Compared to previous recessions, we see the current slump having a smaller negative impact on productivity, due to firms quickly scaling back workers’ hours and the especially sharp drop in services output but we expect the underlying factors that have suppressed productivity growth over the past decade to continue.
Oxford Economics has conducted extensive regional analysis on the impacts of coronavirus and the effectiveness of policy responses to combat this recession. In the US, we forecast that rate lift-off from the effective lower bound (ELB) will not take place until mid-2024 as inflation struggles to reach 2% on a sustained basis and the unemployment rate lags improvement in the overall economy. European leaders finally agreed a €750bn plan to finance the economic recovery andit should provide a meaningful cyclical boost to the recovery and reduce the economic damage from the pandemic, particularly for some of the countries hardest hit. Argentina and Ecuador have made progress on debt restricting and we expect sustainability to be restored in the medium-term, but it is reliant on sensible policy making.
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