EconPol Europe: Economic Experts Expect Global Economy Contraction of 4.4 Percent

Global economic experts surveyed by EconPol Europe expect economic output to shrink by 4.4 percent in 2020, with projected GDP growth predicted to improve to + 3.2 per cent by 2021. But the forecasts - from 950 experts in 110 countries - suggest that recovery from the economic crash caused by the Covid-19 pandemic will be longer than previously expected, with pre-crisis levels not reached until 2022 in many places. 

The experts cite liquidity support for small and medium-sized enterprises and improvements in health care systems as the most effective economic policy measures. Economists from countries where short-time work is in use are most likely to see the measure as a particularly suitable tool.

The experts surveyed have widely differing expectations of how long the recovery will take. Taking all respondents together, more than one third (36.4 percent) expect economic output to return to pre-crisis levels in 2022. By contrast, 19.4 percent believe that a full recovery will not set in until 2023. Meanwhile, 24.4 percent are more optimistic and expect a full recovery as early as 2021, with 15.7 percent believing that it won’t arrive before 2023.

 According to the experts, the most effective economic policy measure is liquidity support for small and medium-sized enterprises. On a scale of 1 to 6, such support is rated as 5.0 on average. This measure is rated highest in the EU, the US, and other advanced economies. For experts in emerging and developing countries in Asia, Latin America and Africa, improvements in the health care system are at the top of the list of priorities.

Respondents consider temporary tax deferrals for companies (4.4), short-time work (4.3) and additional childcare provision (4.2) to be good policy measures in most groups of countries. The exception is the US, where the experts think much less highly of temporary tax deferrals (3.4). While liquidity support for larger companies is also considered important (4.0), respondents see it as much less relevant than support for small and medium-sized enterprises.

The survey was conducted between 12-29 August 2020.