Nascent recovery in economic activity
The global economy is now gradually reopening. The leading indicators are positive and suggest that a V-shaped recovery is still on the table. However, after three months of lockdown these indicators may only signal a technical rebound (rather than expansionary growth) with the relaunch of production and some ‘revenge consumption’.
The coming months will be crucial for the global economy, and household confidence will be one of the key drivers. With the holiday season approaching and an implied decrease in business activity, household consumption will be one of the main indicators to look at in the short term. Encouraging people to spend money will be important to sustaining a recovery, although household expenditure is now being decided against a backdrop of unemployment worries. In the mid-term, the impact of the crisis on the job market may determine future economic development and whether we see a quick and short rebound, or a protracted path back to growth.