The Strategist

Barclays analysts expect W-shaped economic recovery after COVID-19

10/20/2020 - 04:37

The economic recovery in the world may unfold according to a W-scenario because of the second wave of COVID-19 and newly introduced restrictions, warned analysts at Barclays.

The recovery of the world’s economy may unfold according to a W-shaped scenario. If it happens, a new recession can start after a recovery is noted, and growth of the economy is not expected until 2021, says an analytical report compiled by Barclays. This scenario can be possible after the second wave of the novel coronavirus pandemic and growing incidence of the COVID-19 virus across the world, analysts note. 

The paper pays attention to the rising risks that "the recovery in Q4 2020 may be postponed if recent lockdown measures are not enough and the hospitalization rate returns to figures noted earlier in 2020. The analysts noted that the mortality has fallen, but that countries cannot keep it low. 

The growing rate of infection, that is, the number of those infected, may create the conditions favourable "for a W-scenario of the economic recovery, where strict lockdowns might slow down economic activity to the level of Q2 2020". 

Baseline forecast of Barclays suggests that the world’s economy will show 3.6% fall in 2020 compared to 2019, and will rise by 5% in the next year. Growth of GDP across the world in Q4 could rise to 9.7% compared if the next wave of the novel coronavirus pandemic does not reach all states. “Even though national-wide lockdowns have been avoided so far, regional-level restrictions imply bad economic consequences,” notes the report.