Economic activity in Europe suffered a severe shock in the first half of the year and rebounded strongly in the third quarter as containment measures were gradually lifted.
However, the resurgence of the pandemic in recent weeks is resulting in disruptions as national authorities introduce new public health measures to limit its spread.
Global GDP (excluding the EU) is expected to contract by 3.8% in 2020 as the COVID-19 shock, containment measures and increased uncertainty are set to lower private consumption, investment and foreign trade. Over the forecast horizon, the rebound in domestic demand helped by a growth-supportive macroeconomic policy mix is set to lift the annual growth rate in 2021.
The contraction of global trade in the first half of the year is projected to be only partially mitigated by the bounce back in the second half of 2020. Annual trade growth in 2021 and 2022 is set to lower the gap with levels registered before the pandemic. However, with disruptions in global supply chains persisting, trade conflicts ongoing, and uncertainty remaining elevated, the rebound is expected to be insufficient for a return in 2022 to the levels recorded in 2019.