The world economy: global outlook overview

The Covid-19 pandemic and the effects of the measures taken to protect lives continue to dominate the shortterm global economic outlook. Since our May Review the pandemic has spread further, especially to Latin America, and the number of people infected has increased six-fold. However, the lockdown measures to protect public health in those countries that saw high rates of infection in the first four months of this year appear to have been successful and most countries that reported high and rising death rates three months ago are now seeing lower infection and death rates. As a result, many countries have started to gradually ease their lockdown restrictions, allowing suspended economic activities to restart. For these countries, after the lockdowns, unlocking contains its own uncertainties. The dramatic disruption to the global economy is projected to lead to a fall in global GDP of 5 per cent this year, a loss of around $10 trillion for the global economy relative to our projection made last November. The shortterm fall in global GDP dwarfs the reduction experienced in the financial crisis, as shown in figure 1, when the worst fall in global GDP in a calendar year was of 0.1 per cent in 2009. Our main-case forecast scenario envisages a pickup in economic activity next year, when we project global growth of 6¼ per cent. Even with such a rebound in GDP growth, our projection implies that, at the end of 2021, the level of global GDP would be 1½ per cent higher than at the end of 2019, before the pandemic hit.