Global Economy: Recovery Slowing Down: DIW Economic Outlook

Abstract

The global economy recovered more quickly than expected in the third quarter of 2020. Following the coronavirus-related slumps, economic output increased by seven percent. A decrease in infection rates and thus an easing of containment measures contributed to re-normalizing production processes and trade. Private households also began demanding more consumer goods again, especially personal services. However, the second wave in fall 2020 will slow down the recovery. In 2020, global production will shrink by 3.4 percent; the growth rates in 2021 and 2022, 6.3 and 4.4 percent respectively, are likely to be stronger than forecasts in fall 2020. Despite this, there are many risks: Even though the vaccine breakthroughs are promising, other uncontrolled increases in coronavirus cases could occur. Furthermore, the extent to which corporate insolvencies will increase and how a wave of insolvencies would impact economic recovery cannot be predicted.

Paul Berenberg-Gossler

Research Associate in the Forecasting and Economic Policy Department

Geraldine Dany-Knedlik

Research Associate in the Macroeconomics Department

Sandra Pasch

Scholarship Recipient in the Macroeconomics Department

Claus Michelsen

Head of Department in the Forecasting and Economic Policy Department

Hella Engerer

Research Associate in the Energy, Transportation, Environment Department

Topics: Business cycles



JEL-Classification: E32;E66;F01
Keywords: Business cycle forecast, ecoomic outlook
DOI:
https://doi.org/10.18723/diw_dwr:2020-50-2