Morgan Stanley: The world economy will return to pre-coronavirus in the third quarter of 2021

Economists at investment bank Morgan Stanley suggested that the global economy will recover and return to pre-Covid-19 pandemic levels as early as next year 2021, and three months before the previous expectations for a recovery in the economy.

Economists at Morgan Stanley said, in a note to clients: “Evidence indicates that the virus equation against the economy has changed dramatically compared to the early days of the pandemic outbreak, and they stated that the recovery continues to gain momentum as countries improve their handling of the virus."

Morgan Stanley's memo added that the US economy may reach pre-Covid-19 levels in the second quarter of next year 2021, with the return of all developed markets to these levels delayed to the third quarter of next year.

Economists at Morgan Stanley expected that the expected recovery of the economy would be accompanied by higher rates of inflation, in light of unprecedented levels of financial and monetary support and a possible disruption to trade.

In the second quarter of this year, the US economy suffered its biggest decline since at least the 1940s, highlighting how the Corona epidemic has destroyed companies across the country and left millions of Americans unemployed.

US Commerce Department data showed GDP fell 9.5% in the second quarter compared to the first quarter, a decline equivalent to an annual pace of 32.9%.

This is the largest annual decline in the quarterly records dating back to 1947, while analysts' estimates were for the US economy to shrink by 34.5%.