Stronger than expected economic rebound in recent months will return world economic output to the pre-pandemic level by mid-2021, Deutsche Bank release on Monday stated. On the other hand, rising debt levels and shifting policies could heighten the financial crisis risk. Peter Hooper, Deutsche global head of economic research said that global economic recovery from the pandemic plunge past winter and spring has restored significantly faster than predicted. As Q3 almost ended, the level of global GDP estimation is about half than the pre-pandemic levels, and next year, the recovery will be completed mid-year, sooner by a couple of quarters than earlier projections.
Deutsche Bank had raised its forecast for global GDP, forecasting it to shrink 3.9% in 2020 after a previous 5.9% contraction prediction. Deutsche increased its growth forecast from 5.3% to 5.6% for 2021.
On the other hand, a lot of uncertainties and potential troubles are still looming ahead, as fears over second wave infections have risen unpredictability over the economic outlook and situations, added with the U.S upcoming elections and a hard Brexit shock in the mix. Another concern is the alteration or changeover in the monetary policy could induce further trouble, even the immediate effect might not always be visible but over some years away.
The debt expansion and asset’s potential overvaluation which has been sustained by easy monetary policy gives an insight of the looming serious risk of the global financial crisis, as central banks are starting to deflect from the easy policy, thus, the upward, unforeseen inflation would increase the risk, Hooper added.
