COVID led to the largest contraction in global economic activity since the Great Depression but initial lockdowns were coupled with unprecedented government spending to support both household incomes and business balance sheets.
Despite the strong economic rebound to date, uncertainty remains in relation to the impact to the Delta coronavirus variant. Unless circumstances change, higher cases are unlikely to prompt reimposition of the strictest restrictions to activity in economies where vaccine rollouts are well underway.
While the longer-term impact of the pandemic on global growth will become more apparent in coming years, several structural shifts are beginning to become clear including increased levels of government debt, supply chain disruptions, increased nationalist sentiment and the impact of climate change and policies to reach Net Zero.
As we move into the second half of the decade, the advanced economies will return to GDP growth rates that broadly prevailed in the 2010-20 period.