The Initial Acceleration Stage Of The Recovery Is Behind Us

Advanced economies have continued to reopen with an emphasis on adapting to life with the virus still present. Some emerging markets (like India) are willing to tolerate much higher infection rates to limit the economic fallout. At the other end of the spectrum are Asian countries (like Vietnam) with low vaccination rates, which have adopted a zero or low infection tolerance. The trajectory of growth across countries will continue to be determined by these asymmetric approaches.

The rapid recovery in highly vaccinated countries is running into supply-side constraints emanating from Asian economies with more limited vaccination coverage. The initial surge of the recovery is behind us, and we are now in a phase in which supply constraints will limit activity and add to price pressures.