Global | Coronavirus Watch: Services to drive the recovery

After a weak Q1 for the global economy, our baseline forecast is for a strong growth rebound in Q2, and we remain more optimistic than the consensus on prospects for 2021 as a whole.

It’s too early to draw definitive conclusions from the data on the pace of growth in Q2. For industry, despite the buoyancy of recent surveys, hard data suggest that it is unlikely to push growth sharply higher, partly because of ongoing supply bottlenecks and shortages.

But for services, our baseline forecasts assume that this sector will do more of the heavy lifting from Q2 on. While a lack of monthly hard data makes it harder to judge near-term service sector growth dynamics, surveys on services continue to strengthen, and alternative data such as OpenTable’s seated diners point to rising restaurant activity in economies where premises have reopened.

The services rebound, combined with the unleashing of consumers’ huge savings stockpiles and slowing global Covid cases, means that we see few reasons to materially alter our assessment of the economic outlook.