World economy unlikely to attain pre-Covid output level before 2022: Report

With COVID-19 still dominating major developments globally, the world economy is not likely to re-attain pre-pandemic output levels before 2022, says a report.

According to Dun & Bradstreet Country Risk and the Global Outlook, "nothing about the pandemic can be classified as over, despite recoveries in activity levels in some economies in Q3, as evident in PMIs (Purchasing Managers Indices), Google Mobility data and monthly economic data".

Unemployment will keep rising above the pre-pandemic baseline as government programmes are phased out and cease to protect workers, while the pace of what recovery there is may yet weaken in Q4, said Arun Singh, Global Chief Economist, Dun & Bradstreet.

Singh further said "we do not expect the world economy to re-attain pre-pandemic output levels before 2022. The biggest question mark is not over the depth of the recent shock but over its persistence."

According to Singh, "in India, the pace of economic revival will depend on how quickly the health concerns abate as India is yet to witness a peak, economic activity restarts with 'Unlock 4' and importantly the psychological impact of the COVID-19 ebbs away."

The steady rise in case-loads, even as India demonstrates one of the highest recovery rates, and the spillover effects of the strict lockdown measures undermines the growth impulses in Q2 and Q3 of the fiscal year, he added.

India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9 per cent as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment.

On the employment front, all countries that Dun & Bradstreet covers (with the exception of Serbia) are showing year-on-year declines, the report said.

"Indeed, we believe that the road ahead will be one of further spikes and troughs in economic activity, with considerable regional variations. Even if all jobs were to be saved, the decline in 2020 corporate profits in most OECD (Organisation for Economic Co-operation and Development) economies would be at least 5 per cent," it said.

On Asia Pacific, the report said "optimism that leading Asia-Pacific economies' early containment of the virus could lead an exceptional GDP performance is receding, with South Korea on the brink of lockdown in August, Japan suffering case numbers comparable to those in western European countries, and even virus-free Taiwan region's economy shrinking year-on-year in Q2".