The rapid spread of the Delta coronavirus variant across the globe is a cause for concern. However, evidence suggests that vaccinations are an effective tool against this new strain. Investec maintains its view that the world economy will experience a robust recovery from the pandemic and have left their forecasts broadly unchanged.
The Global Outlook:
While the number of global daily cases has continued to trend lower over the last two months, the key risk to global growth prospects continues to be the pandemic. The rapid spread around the world of the more transmissible Delta variant, which was first detected in India, is a cause for concern. However, evidence suggests that vaccinations are an effective tool against this new strain, breaking the link between infections and hospitalisations. Despite the rapidly evolving risks, economic sentiment continues to track higher, resulting in some central banks heading towards monetary policy tightening. On the whole, we maintain our view that the global reopening of society will lead to a robust recovery from the pandemic. Consequently, we have left our world economic growth forecasts broadly unchanged at 6.1% in 2021, with a slight 0.1 percentage point reduction stemming from downgrades to India, and 4.8% in 2022.
Read Investec's Global Economic Review in full here.