Global Data Watch

 COVID fears tempered by robust recovery dynamics for now

 Wide divergences on the path to global disinflation

 Colombia taps FCL, COPOM eyes Brazil fiscal stance

 Next week: Sept global service PMIs, EMU Aug ret sales, RBA on hold

Autumn in New York, why does it seem so inviting?

Although third-quarter GDP releases are not yet available, we can already

glean two important lessons from last quarter’s performance. The first is that

the growth rebound as COVID-19 lockdowns were relaxed was uniformly

strong as substantial pent-up demand was released everywhere. With an additional

upward revision this week, we forecast a 35.7% ar global bounce last

quarter with 36 of the 39 countries we track projected to deliver double-digit

gains. Growth will moderate from this pace but it is possible to sustain sufficient

momentum to generate a complete rebound. This second lesson comes

from China’s FIFO experience where GDP is expected to record another double-

digit increase last quarter following a 56% ar gain in 2Q20. Its effective

virus containment, supportive macroeconomic policies, and favorable positioning

in the face of rapidly growing global goods demand place China on a

path to return to the pre-crisis GDP level projected at the start of the year.

We anticipate rest-of-world GDP will finish this year nearly 5% below precrisis

levels as virus containment and macroeconomic policy are not being

managed effectively. Indeed, recent policy developments have reinforced

concerns on this front. Although treatment has improved and mortality rates

have decreased, COVID-19 has not been contained and new cases globally

have moved back to their mid-year highs (Figure 1). At the same time, there is

no evidence that fiscal policy is moving to offset the run-off in emergency

stimulus and we forecast a large 2021 fiscal drag, amounting to 2.4% of GDP.