What we see

The world economy is set to accelerate later this year, but prospects are expected to vary regionally and by economies, according to success in responding to the COVID-19 pandemic. While China and EM Asia continue to lead the global recovery, Europe has struggled more to contain the virus, and given lingering structural challenges, is unlikely to return to pre-pandemic levels until 2022. In contrast, the U.S. outlook has brightened amid prospects for greater fiscal stimulus, and surprisingly limited signs of permanent damage to the economy which should allow for a faster and more durable recovery once the crisis is behind us. Although the recent resurgence of infections is still weighing on growth, high frequency data has begun to show signs of stabilization as case levels fall, indicating the current economic soft patch is unlikely to last much longer. With expectations of highly effective vaccines becoming widely available within the next six months and allowing for a return to more normal economic activity, U.S. GDP should return to pre-pandemic levels sometime later this year.