Post-Covid reset or mean reversion?

The scale and duration of the Covid shock has led to structural changes in policy and business models: a post-Covid reset is more likely than mean reversion

In many advanced economies Q2 GDP was at or above Q4 2019 levels, reflecting a strong recovery process.  Looking forward, there are global economic headwinds: from delta and supply chain constraints, to slowing growth in China and the US.  These concerns were reflected in markets this week. But overall, the global recovery is continuing.

High vaccination rates in Europe and the US are allowing for a measure of normalisation.  Across developed countries, the increase in Covid cases as economies have opened up has not been accompanied by proportionate increases in hospitalisations and deaths – despite the complications of delta.

It will continue to be a bumpy road, with new variants and ongoing restrictions likely.  Israel, which led on vaccinations, gives a sense of what this looks like.  And of course, much of the world is not in the privileged position of advanced economies in terms of access to vaccines.  But things are moving in the right direction.