Vaccines to trigger uneven recoveries from Covid

Highlights:

• Global activity is set to rebound this year amid progressing vaccination and a reopening of economies in spring/summer. Yet with the arrival of more aggressive Covid-19 mutations, bottlenecks in the vaccine supply and the health systems under stress, lockdowns especially in Europe may last longer than previously assumed, postponing the recovery.
• Especially the euro area is hit hard. Amid additional and prolonged restrictions and a delayed achievement of herd immunity, we lower our base 2021 GDP growth projection from 5.3% to 4.0%.
• In contrast, speedier vaccination and the prospects of another substantial fiscal stimulus make us raise our growth expectations for the US from 5.5% to 6.1%. We reaffirm our 7.8% growth forecast for China.
• Monetary policy will remain accommodative, but barring a severe deterioration of the pandemic, we do not expect another material easing.

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