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The Q1 Global Economic Conditions Survey (GECS) is much more positive than its immediate predecessor, with confidence rising by the most in the history of the survey. The approval and deployment of several effective vaccines has dramatically improved the prospects of an end to the COVID crisis.

The global orders index also increased in the Q1 survey and is consistent with accelerating global economic growth in coming months. But the two ‘fear’ indices in GECS – measured by concern that customers and suppliers may go out of business –are still at elevated levels, underscoring the high degree of uncertainty that persists about the outlook.  

Confidence up in all regions – especially North America

Confidence jumped the most in North America where the combined effects of vaccines and fiscal stimulus have transformed the outlook. South Asia and Asia Pacific also recorded much improved confidence, reflecting better domestic and global demand prospects. Western Europe, Africa and the Middle East all showed more modest increases in confidence, but sentiment in all major regions improved.

Three key influences on economic prospects

Three factors will heavily influence economic prospects in the coming months, most significant is the rate of vaccination which varies greatly across countries. Put simply, vaccination can replace lockdown as a means of controlling COVID-19, thereby allowing economic conditions to return to normal.

Policy is also very important and a major fiscal stimulus in the US will have positive spill-over effects on many other economies this year. Especially in advanced economies, there is also a large pile of savings accumulated during lockdowns and this can be a source of extra demand as economic recovery is established.  

Outlook in US and UK better than in euro-zone

On these criteria, the US and UK have better growth prospects than the euro-zone, while China is likely to continue to experience strong growth in any case. Many emerging markets will benefit from increased global demand, but vaccination rates are likely to remain low over the rest of 2021. 

Further reading