World Economic Prospects Monthly.

Overview: Renewed restrictions dampen prospects ▀ The global economic recovery has now entered a second, slower growth phase. With many economies, particularly in Europe, needing to reimpose some restrictions on activity in the light of rising Covid‐19 cases, we have again nudged down our forecast for global GDP growth next year, from 5.4% to 5.2%.▀ In response to recent GDP releases and some other timely indicators, we have edged up our growth estimates for Q2 and Q3 2020 a touch at a global level. But this improvement has been broadly offset by downward revisions to our GDP growth forecast for Q4 2020 and early next year.▀ True, retail sales and consumer confidence data have recently been encouraging in the advanced economies as a whole. But it is unclear whether the strength of the former reflects households spending more freely or continued substitution of spending away from services towards goods as a result of restrictions to curb the spread of Covid‐19.▀ It is also uncertain as to the extent that households and firms will adjust behaviour in response to the recent resurgence in the number of Covid‐19 cases in many parts of the world. Expectations of further curbs to come or a slower return to normal may also prompt households and firms to become more cautious. In this respect, the renewed, albeit small, fall in the global services PMI in September provides pause for thought.▀ Overall then we have become somewhat more cautious about the pace of the expansion as we move into Q4. Growth over the next few quarters is still expected to be similar to that recorded during the post‐global financial crisis recovery. But this is conditional on very supportive fiscal and monetary policy as well as the avoidance of a widespread return to lockdown‐style conditions. Thus, risks to our baseline forecast remain firmly skewed to the downside. [ABSTRACT FROM AUTHOR]

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