Moody's Corporation released the Global Macro Outlook 2021-22 (Global Macro Outlook 2021-22) research report on November 12, US Eastern time, saying that although the global economy is just beginning to recover, the prospects for recovery will still be fragile.

Moody's Corporation believes that the global economic recovery is beginning to show signs, but the increase in the number of COVID-19 cases in the United States and Europe poses a threat to the global economic recovery, and the degree of recovery varies among countries:

1. The aggregate economic output of the Group of 20 economies is expected to decline by 3.8 per cent for the whole of 2020, and will grow by 4.9 per cent by 2021 and 3.8 per cent in 2022.

2. The total economic output of the advanced economies of the G20 is expected to decline by 5.1% in 2020, grow by 4.2% in 2021 and 3.3% in 2022.

3. As for the G20 emerging markets, it is expected to contract by 1.6 per cent in 2020 and grow by 6.1 per cent by 2021. Excluding China, the G20 emerging market countries are expected to contract by 6.6% in 2020 and achieve a slow recovery of 4.7% and 3.5% in 2021 and 2022.。

In terms of policy, among the developed economies, Moody's Corporation expects the government to continue to provide financial support to their economies in the coming quarters, and monetary policy in the United States, Europe and Japan will remain highly loose. Emerging market countries, by contrast, have relatively small finances and limited room for further interest rate cuts or massive quantitative easing.

The degree of recovery varies greatly from country to country

Moody's Corporation said in the report that the economic recovery in the United States and Europe still faces greater risks, mainly due to the rapid increase in the number of novel coronavirus infections in these two countries and the lack of active measures to curb the spread of the virus. However, some European countries, including the UK, Germany, France, Italy and Spain, have imposed new restrictions, which will no doubt dampen economic activity.

In the short term, the economic recovery in the coming year will be highly dependent on three factors:

• Research and Development Progress and Distribution of COVID-19 Vaccine

• Effective anti-epidemic management measures

• The policy support of the government.

Moody's Corporation predicts that real GDP in most G20 economies will not return to pre-COVID-19 levels by 2022.

Moreover, even if GDP returns to previous levels, it does not mean that full employment can be restored. To restore full capacity production and low unemployment, the global economy will need to maintain above-trend growth rates for years to come. As the suppression continues, the greater the likelihood of permanent loss of productive capacity in terms of human and physical capital. Such a result will inadvertently lead to a decline in the long-term growth trajectory.

The outlook for the US economy depends on stimulus measures

Moody's Corporation predicts that after an overall contraction of 3.6 per cent in 2020, real GDP growth in the US will grow by 4.2 per cent in 2021 and 3.9 per cent in 2022.

Moody's Corporation raised his forecast for real US GDP growth in 2020 from-5.7 per cent to-3.6 per cent, mainly due to a sharp rebound in US consumption in the third quarter and expected economic activity to return to pre-outbreak levels in the second half of 2021, although the pace of growth will slow over time.

In terms of fiscal policy, Moody's Corporation expects the additional fiscal stimulus to be relatively limited. Next, we will pay close attention to the new fiscal measures, as the impact of fiscal expenditure depends not only on the scale of the measures, but also on the scope of the measures.

At present, Biden, a representative of democratic parties, is widely regarded as the winner of the 2020 US presidential election. Biden advocates providing direct support to families as long as the economy remains weak. However, Moody's Corporation believes that if Congress remains divided, it will also have a huge impact on the Biden administration's ability to implement its policy agenda.

China's economic recovery is slowly expanding

Moody's Corporation raised his forecast for China's economic growth in 2020 to 2.2 per cent from 1.9 per cent, and expects real GDP to grow by 7 per cent in 2021 and 5.5 per cent in 2022.

Moody's Corporation said that China's good improvement in supply is reflected in the strong rebound in industrial activity, which is driving the economic rebound. Strong export growth also supported the recovery in the second and third quarters, first because of a rebound in demand for medical supplies and electronics and later because of a rebound in consumer demand in developed economies. Public sector spending on infrastructure and real estate continues to drive total investment.

Moody's Corporation said China's recently announced "two-cycle" model is an attempt to shift its economy to domestic demand-driven, especially consumption-driven. Under the dual-cycle model, household consumption, which has been stable at 38% of GDP over the past four years, will also increase as a share of GDP.

Summary

Moody's Corporation believes that with the passage of time, better anti-epidemic management measures and the emergence of effective vaccines or treatments will greatly reduce novel coronavirus's macroeconomic influence.

However, an effective vaccine is unlikely to be widely used by mid-2021. During this period, effective anti-epidemic management measures are essential for countries to maintain a stable recovery.