Revised S&P forecasts for 2020 remain broadly unchanged for world and major economies, but project a weaker start to 2021; world gross domestic product (GDP) to contract 4% in 2020, and rebound to grow by 5% next year
Successful trials for vaccines against Covid-19 come against the backdrop of renewed infections and slowing momentum in economic activity
The energy index rose significantly in November, driven by a rise in crude oil prices
News that vaccine candidates have received the green light have buoyed the growth outlook for next year for many economies. Further, though trade and unemploymentindicators across major economies improved in October and November, highfrequency indicators, including mobility trends, indicate the rebound in economicactivity seen since the third quarter (Q3) has slowed down. Within sectors, economic performance has been uneven, with weak services and strong manufacturing activity.As momentum fades, S&P Global (December 2020) forecasts a weaker start to 2021, with full-year GDP growth revised downwards by 30 basis points to 5%.
The risks to S&P’s baseline are on the downside: new lockdowns may last longer than expected (Germany has already announced an extension of lockdown up tillend of this year) and governments may suffer from stimulus fatigue and end support too early. However, the vaccine timing remains an upside. In fact, the earlier-thanexpected vaccine development has been the biggest positive for the global economy. This gives it something to look forward as an abysmal year draws to a welcome end.
