Chief economist at EY Mark Gregory has predicted a slower u-shaped recovery for the UK, rather than the hoped-for rapid V-shaped bounceback.
Gregory has predicted a 6.8% contraction in GDP for the world’s sixth largest economy this year due to the effects of Covid-19: “The discussion around the future path of the economy has centred around defining scenarios with V, U and L the most common stylised versions, describing different lengths of slowdown and alternative paces of recovery.
“The initial consensus was that a V-shaped recovery was most likely but without either a vaccine or any definitive view on the possibility of using drugs developed for other purposes to mitigate symptoms, a rapid recovery looks increasingly unlikely and a U-shaped, slower recovery with possible shifts back into lockdown is now the scenario I am seeing used most widely.”
The world’s third largest economy, Japan, is facing contraction in GDP of between 5 and 3% according to the majority of board members of the Bank of Japan.
They predict the country’s GDP will recover to see growth of between 2.8% and 3.9% in 2021.
This prediction is, however, strongly caveated: “Future developments are extremely unclear, as they could change depending on the timing of the spread of Covid-19 subsiding and on the magnitude of the impact on domestic and overseas economies.”
Boston Consulting Group, meanwhile, is reporting an uptick in consumer confidence across leading western economies.
“Many countries have begun making plans to reopen their economies, indicating that an end to the restrictions may be in sight.
“This development, in conjunction with the slowing pace of new Covid-19 cases, may have contributed to the recent improvements in consumer outlook that we are now observing: fewer consumers across developed markets believe that the worst is yet to come.
“We are also seeing a slight decline or stabilization across most countries in consumers’ concerns about personal finances—an indication that they may be anticipating the end of the lockdown period and the potential restarting of the economy.”