Rapid and robust recovery underway

We’ve been more optimistic than most about the economic outlook since it was announced in November that COVID-19 vaccines were effective. But now that the COVID-19 restrictions are being removed, it looks as though the rebound in activity may be even faster than we expected. We estimate that the reopening in schools drove a 1.5% m/m rise in GDP in March and that the reopening of non-essential retailers/hospitality in April and May might lead to bigger gains. As such, GDP may return to its pre-crisis peak ahead of our forecast of around the turn of the year. A faster recovery would support our view that COVID-19 won’t leave a big scar on either the level or growth rate of GDP in the long term.