Our Long-Term Forecasts survey for the G7 & Western Europe comes in the midst of world-changing events (partly reflected in our contributors' huge markdowns in 2020 forecasts for GDP and other variables). The global COVID-19 pandemic has infected countless millions, with a worrying tally of official deaths. This acute health emergency has triggered the physical shutdown of vast sectors of activity. As a result, GDP is in freefall for all countries surveyed. The forecasts do indicate hope that, after this disastrous year, many economies can return to more normal working conditions in 2021, as evidenced by a +3.9% rebound for the US and +4.5% recovery in Germany. However, this will depend on many health-related factors. First is a vaccine or cure. However, there is uncertainty over how long that will take, not to mention the speed in having it mass-produced and distributed. With some groups under lockdown and job losses mounting to record levels (especially in the US), there is already pushback over how long this state of affairs can continue. Many G7 & Western European governments have talked about lifting restrictions slowly over the next few months, but this will depend on (1) widespread testing, and (2) ascertaining those who have coronavirus immunity. The latter will be useful in allowing returns to work. Some economies (like Germany) have an impressive testing system in place. For others, though, the rollout is by no means assured, particularly in the US and UK where large-scale testing has had difficulty getting off the ground. These Long-Term Forecasts also go beyond the question of whether an immediate V- or U-shaped economic recovery is in the works. With 2021 forecasts inflated by base-year effects, 2022 and 2023 projections are key in showing the growth path upon which economies may eventually settle. The longer countries remain in lockdown, the harder it will be to extricate from the deep loss in output, jobs and lives. This could hasten the faster onset of automation and decline of bricks-and-mortar retail. The longer-term horizon also gives us an idea of whether this crisis will weigh on later potential growth. 6-10 year forecasts have not changed as much as near-term projections; longstanding productivity ordemographic issues remain relevant.
展开▼
