World GDP will return to the level it was before Covid-19 by mid-2021 after a stronger-than-expected economic bounce in recent months, Deutsche Bank said on Monday, but bloated debt levels and a shift in policy could heighten the risk of a financial crisis.
“Global economic recovery from the depths of the Covid-19 plunge this past winter and spring has proceeded significantly faster than we envisioned,” Peter Hooper, Deutsche global head of economic research wrote in a note to clients.
“As Q3 draws toward a close, we estimate that the level of global GDP is about half way back to its pre-virus level, and we now see that journey being completed by the middle of next year, a couple quarters sooner than in our previous forecast.”
Deutsche upped its forecast for global GDP to -3.9 per cent after predicting in May a year-on-year contraction of -5.9 per cent for 2020. For 2021, Deutsche raised its growth forecast to 5.6 per cent from 5.3 per cent.