By almost any metric, 2020 was an awful year. COVID-19 caused untold heartache for families and businesses all over the world, with millions of lives affected by the pandemic, the sharpest contraction in global GDP ever recorded, and the steepest ever rises in unemployment.
But, thanks to the amazing progress made by scientists across the globe, an end is in sight. The UK started vaccinating its population in December ahead of expected approvals for the other three leading global vaccines in many other parts of the world.
It will take time to protect the whole world because of distribution issues surrounding the vaccines, but there is finally some clear light at the end of a very dark tunnel. And that cheer should be seen in economic data during the coming year.
A rebound in the global services sector is likely in 2021, helping to improve job prospects. And although levels of activity may not return to previous levels quickly, the final leg of the recovery can get underway.
While it may not be the same everywhere, the good economic news has already started. Despite November lockdowns weighing on the service sector data in Europe, the impact of these restrictions was much smaller than in spring 2020.
Indeed, the industrial sector is booming: the global manufacturing purchasing managers’ index has recovered to just shy of a ten-year high. And not only consumer goods are strong: investment goods have also shown remarkable resilience.
Parts of the world that got on top of COVID-19 are seeing the strongest recoveries. The consumer sector in mainland China is showing more robust growth (even if the growth rate is still slower than pre-pandemic); India’s activity data became a lot more promising as the number of new daily cases collapsed and; and we’ve had to upgrade our forecasts in Brazil on the back of better figures.
Where COVID-19 has been controlled, activity is returning to normal. In Taiwan, New Zealand and parts of Australia revellers are packing into music festivals, sporting events and planes, giving a sense of what the rest of the world could see in 2021.
Of course, it’s not all rosy – there are near-term risks in Europe and the US from high levels of coronavirus cases, there may be some scarring of economies into 2021, and labour-market weakness may constrain a rebound. But, for the first time in a long time, the news flow is more positive than negative, and that is something to cheer after the most arduous of years.
First published 8 December 2020.
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