Monthly economic brief: July 2020

GDP Growth Outlook

The economic outlook for 2020 has deteriorated significantly as a result of the coronavirus pandemic and the necessary restrictions on economic activity to minimise the spread of the virus.

• The scale and duration of the economic impacts remains uncertain, however the degree of pessimism in forecasts has increased over the course of the year.
• At a global level, the latest IMF World Economic Outlook Update^[33] projects a deeper fall in output in 2020 and a more gradual recovery than was previously estimated, with global GDP projected to fall by 4.9% in 2020.
• At a domestic level, as lockdown restrictions begin to be loosened across the UK, the economic data has started to show an increase in business activity as firms plan and restart operations. However, underlying demand remains weak with new orders/business not strengthening to the same degree and businesses continuing to reduce staffing levels.
• Scotland's scenario analysis published last month, suggests GDP could fall by 14% in 2020 and unemployment could rise above 10%, and that a gradual recovery in which output and employment doesn't get back to pre-crisis levels until 2023-24 is increasingly likely.^[34]
• Scenario analysis from the Bank of England estimates UK GDP could fall by 14% over the year^[35] while HM Treasury's monthly summary of independent GDP forecasts^[36] reports UK GDP is forecast to contract by an average of -9.2% in 2020 (down from -8.6 in May 2020).