WBIL

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.

Global markets pulled back from a torrid pace set throughout July and August. The MSCI All-Country World Index was down 3.2% for the month.The first two months saw rallies in the global reflation trade only to see investors back away from this trade in September.Japan equities rallied following reports of Warren Buffett’s Berkshire Hathaway purchase of Japanese trading companies (value play) despite the unexpected resignation of prime minister Shinzo Abe.Europe lagged due to rising risks of a hard Brexit as prospects for a post-Brexit trade deal were threatened with U.K. Parliament’s passage of a bill targeting the Northern Ireland/Irish border.Precious metals came under pressure as negative real interest rates appear to have a reached a floor, while commodities were hurt by a pullback in oil prices over concerns of waning demand and OPEC overproduction.

August's government debt sell-off proved to be short-lived.The German 10-year Bund yield fell by nearly 12.5 basis points to close at -0.53%.The AIG Australian Performance of Manufacturing Index declined 2.6 points in September for the second consecutive month.

Output growth reported in 18 out of 25 sectors in September, led by autos and parts markers.Tourism and recreation remain the hardest hit.Rising equipment and machinery spending hints at revival in global business investment spending.