DGT

Despite high uncertainty levels still prevalent, the International Monetary Fund is optimistic about global growth this year; it raised its 2021 GDP forecasts (for second time in three months) to 6%

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Without any doubt, Q2 of 2020 was the worst quarter on record for global trade, and this is very likely to apply to 2020 as a whole.China (mainland) is the only top economy showing clear and consistent signs of recovery in Q2 and Q3; the results for September point to a recovery in South Korea as well.Stronger recovery in global real GDP is still expected for Q2 2021; the forecast, unfortunately, depends critically on the ability to deal with the potential waves of the pandemic.

According to third-quarter forecasts by the OECD, by the end of 2021, most economies, including Canada, will have a level of output that remains well below that of 2019, and considerably weaker than projected a year ago.By the end of 2021, America's economy is forecast to be the same size as it was in 2019, China's is expected to be 10% larger, while Europe and Japan's are forecast to remain below their 2019 pre-pandemic level of output for several years.More good reasons to invest in domestic manufacturing and the production of essential goods in Canada.

The rebound in asset prices and the easing in global financial conditions have benefited not only advanced economies, but also emerging markets.Policy measures have allowed firms to cope with cash shortages experienced during economic shutdowns by taking on more debt.Looking ahead, policymakers should carefully sequence their response to build a safe bridge to recovery.

We continue to project a deep recession in 2020. Global growth is projected to be -4.4 percent, an upward revision of 0.8 percent compared to our June update.In 2021, growth is projected to rebound to 5.2 percent, -0.2 percent below our June projection.The divergence in income prospects between advanced economies and emerging and developing economies (excluding China) triggered by this pandemic is projected to worsen.Investments in health, digital infrastructure, green infrastructure and education can help achieve productive, inclusive and sustainable growth. And expanding the safety net where gaps exist can ensure the most vulnerable are protected while supporting near-term activity.

Global equity markets lost some steam in September and posted their first monthly decline since the pandemic-induced meltdown in March.Factories and services are able to reopen for business in a smooth fashion, while government efforts to bridge the income gap stemming from the economic stop prove successful in alleviating.The good news, however, is that the monetary and fiscal impulse will remain firmly in place under this dire economic scenario - which inevitably helps to alleviate the economic damage.