Covid-19 was the main theme in 2020 and will remain the key topic also in 2021. Assumptions about how the pandemic develops are critical for predicting economic scenarios. While there are still many question marks (how quickly and effectively will the vaccine be distributed, how many people will volunteer to take the shot), we think it is rational to assume that somewhere around mid-2021 the mass vaccination reaches the sufficient level to curb worries about potential next waves of the pandemic.
Before we had time to enjoy the stronger than expected economic rebound in 3Q, the time has come to start worrying about the prospect for the coming months. The new wave of pandemic convinced growing number of countries to close down large parts of their economies. It leads to two conclusions: First of all, we will see the second dip of recession in Q4. So far it seems it is going to be clearly smaller than the first one, as the restrictions are not as wide-spread, and – in contrast to what happened in the spring – they affect almost entirely services, while activity in manufacturing is still growing and the foreign trade channels are working (yet, it may still change over time). Secondly, the uncertainty regarding forecasts for the next quarters has risen. The next waves of infection cannot be ruled out and we simply know neither how serious they will be nor how exactly distributed in time. It seems clear that the road towards economic normalisation will be much more bumpy.