Vaccine rollout provides a path to recovery – Fitch Ratings stated in its recent Global Economic Outlook – December 2020 with the sub-title ‘Light at the End of the Tunnel’.
According to Brian Coulton, Chief Economist at Fitch Ratings, “the coronavirus is once again taking its toll on economic activity as the second wave prompts new restrictions, but the vaccine news is a game-changer for the outlook over the next two years”.
Fitch Ratings now expects the decline in world GDP in 2020 to be less severe at –3.7% compared to –4.4% in the September Global Economic Outlook (GEO).
Fitch has also revised up the annual world GDP growth forecast for 2021, but only modestly, to 5.3% (from 5.2%), as the deteriorating outlook in the very near term partially offsets a stronger outlook from the second half of the year.
“We are now significantly more optimistic for 2022, as we assume vaccine rollout will facilitate a material easing in social distancing” – Fitch Ratings said.
Fitch also incorporates a significant uplift to eurozone GDP growth in 2022 from grant disbursements from the EU’s Next Generation EU recovery fund (NGEU). It expects the US and the eurozone to regain pre-pandemic (4Q19) GDP levels earlier than previously anticipated, by 3Q21 and 2Q22, respectively.
“Vaccine rollout problems or delays are the key downside risk and could result in repeated circuit-breake r lockdowns and extensive social distancing through 2021, weighing heavily on GDP” – Fitch Ratings wrote.
