When coronavirus hit, many countries went into lockdown mode to arrest the spread of the virus, bringing normal life to a standstill. Businesses and shops closed, services were hit and trade stalled.
Since April, however, the global economy has gone back to operating at 70-80 percent capacity. Resuming full capacity is not seen in 2020, say Allianz economists. “We expect this situation to persist until the fourth quarter of 2020, albeit to a lower extent, due to targeted lockdowns to combat new outbreaks and prolonged sanitary restrictions,” they write in the report, titled ‘Coping with Covid-19 in Differing Ways’.
A return for the global economy to the pre-crisis level is possible only at the end of 2021. Next year, the economy is expected to grow by 4.8 percent, just about gaining back what it lost, they say.
Of course, a lot depends on how the dreaded ‘second wave’ plays out and how it is managed. “Hot spots include Brazil, Mexico, the U.S, India, Indonesia, the UK and South Africa, countries that are particularly at risk of renewed outbreaks and false restarts,” the economists write.
Europe could struggle longer. This year, the region’s economy is forecast to shrink by a huge 9 percent. Only partial recovery of 6 percent is expected in 2021. Not surprisingly, the biggest laggards would be Italy, Spain and France, the countries in Europe worst hit by the virus.