EconomyJun 18 2021

'Global GDP to recover to pre-pandemic levels in H1 2022'

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'Global GDP to recover to pre-pandemic levels in H1 2022'
Luke MacGregor/Bloomberg

Global GDP is likely to recover to pre-pandemic levels in the first half of 2022, an expert has said.

Speaking at Federated Hermes’ outlook roundtable yesterday (June 17), Eoin Murray, head of investment at the investment manager, said recovery of global GDP will be "at some point within the first half of 2022".

He added there are certain signs indicating whether economies will see long-term scarring.

“There also appears to be an expectation that longer term economic scarring will most likely be down to, first of all, an incomplete recovery in the labor market. And secondly, bankruptcies,” he said.

Murray expects the bankruptcies to be in zombie companies (a company that needs bailouts in order to operate) which have been created by quantitative easing.

“We all know that the rate of bankruptcies has fallen during the pandemic, on the back of huge monetary support, contrary to my predictions of solvency problems at the beginning of the pandemic. 

“So, to me, this suggests that the zombie companies that this monetary supply has created and fostered are all going to falter at some point in the minds of these economists.”

Silvia Dall’Angelo, senior economist at Federated Hermes, added since the firm’s last update at the end of 2020, the economic situation has improved.

“Fundamentals have strengthened, and the recovery is gaining traction. We are [expecting] strong growth in the short term, in the next couple of quarters at least we are [expecting] global growth to be around 6 per cent," she said.

The UK economy has already showed signs of revival, with GDP rising 2.3 per cent in April this year. Although that is 3.7 per cent lower than the pre-pandemic level seen in February last year, it was 1.2 per cent above the  initial recovery peak in October 2020.