The new year starts with better prospects than what we could foresee only a few months ago. This as the introduction of vaccines raises hope that the COVID-19 pandemic can come to an end in the second half of this year. Further, there’s clarity about the United States presidency and Brexit. With this, obstructions to economic growth of the previous year are set to be removed, or at least alleviated in 2021.
We expect economic growth this year to be impressive for many countries and in a historical perspective, but these bright growth figures shroud the underlying recovery from substantial lower levels of economic activity. The release of pent-up demand will be an important growth driver, but what will happen if governments wind down their supportive programmes?
We’ll further highlight how the lockdowns affect the economy. What impact was greater: the stringency of the lockdown measures or the length of the lockdowns? And what will economic growth be in the coming quarters given the three lockdown scenarios we present?