The second half of 2021 is set to see strong economic growth as vaccine rollouts permit more and more countries to return to ‘normal’ levels and patterns of activity, fuelled by a strong consumer and pick up in business investment and, for now, supported by fiscal and monetary policy too.
The US is likely to regain pre-crisis output levels soon, the Euro area not until 2022. Moving into 2022, less supportive fiscal policy will help tame growth rates. Virus mutation remains a substantial downside risk, a booming consumer the main source of upside risk. Higher inflation may prove stickier than expected.