The world economy has clawed back about 60% of the output lost in the first half of the year, but recoveries in most parts of the world have already slowed. Prospects now vary according to success in controlling the virus and the policy response. The outlook for Europe has darkened as second waves have prompted new restrictions and fiscal support is being scaled back. But the US looks more resilient, with risks in both directions relating to the virus and to the possibility of a post-election fiscal stimulus. China will continue to be the key outperformer, although its recovery is doing little to boost growth elsewhere in the world. Meanwhile, inflation will stay very low just about everywhere, implying that the era of unprecedented monetary policy support is set to continue for at least the next couple of years.
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