The Q2 Global Economic Conditions survey (GECS) reflects the scale of the global recession now under way.
Globally, orders and employment indices have plummeted to record lows in the latest survey, consistent with the view that this is the most severe recession in decades. By contrast, global confidence recovered slightly from the record low reached in the Q1 survey. This provides some optimism that recovery is in prospect in the second half of the year.
Orders fall the most in North America and Western Europe
There was only a modest dip in orders in the Asia Pacific region, reflecting the earlier profile of lockdown and subsequent easing this year. The largest falls in orders are in North America and Western Europe - a sign of the collapse in activity in these regions where lockdowns lasted through much of the quarter. Orders also fell markedly in the Middle East, hit by weaker oil prices, as well as directly by COVID-19 effects.
A glimmer of hope in improved confidence
Confidence recovered the most in Asia Pacific, which emerged first from lockdowns, and where confidence has rebounded strongly to its highest level in a year. In other regions, such as North America and Europe, the recovery in confidence is modest, but in stark contrast with the large fall in orders in both regions. Confidence fell further in Africa and the Middle East, in both cases to record lows.
A long recovery road ahead
The April to June quarter this year will see unprecedented falls in GDP, reflecting the period of most severe lockdowns. But the second half of the year is likely to see some recovery as lockdowns are eased. However, a sustained and robust increase in consumption and output seems unlikely. Social distancing measures are set to remain in some form until treatments or a vaccine are widely available – this will restrict activity in the consumer facing services sector. More generally, consumer confidence may remain weak, especially if high rates of unemployment persist. Pre-crisis levels of output may not be regained until the second half of 2022.