For the first time since the pandemic began, there is now hope for a brighter future. Progress with vaccines and treatment have lifted expectations and uncertainty has receded. Thanks to unprecedented government and central bank action, global activity has rapidly recovered in many sectors, though some service activities remain impaired by physical distancing. The collapse in employment has partially reversed, but large numbers of people remain underemployed. Most firms have survived, albeit financially weakened in many cases. Without massive policy support, the economic and social situation would have been calamitous. The worst has been avoided, most of the economic fabric has been preserved and could revive quickly, but the situation remains precarious for many vulnerable people, firms and countries.

The COVID-19 pandemic continues to exert a substantial toll on economies and societies. Prospects for an eventual path out of the crisis have improved, with encouraging news about progress in developing an effective vaccine, but the near-term outlook remains very uncertain. Renewed virus outbreaks in many economies, and the containment measures being introduced, have checked the pace of the global rebound from the output collapse in the first half of 2020, and are likely to result in further near-term output declines, particularly in many European economies. This pattern is likely to persist for some time, given the significant development and logistical challenges in deploying a vaccine widely around the world. Living with the virus for at least another six to nine months will prove challenging. Local outbreaks are likely to continue and will have to be addressed with targeted containment measures if possible, or full economy-wide lockdowns if necessary, which will hold down growth. Some businesses in the sectors most exposed to these continued containment measures may not be able to survive for an extended period without additional support, raising the risk of further job losses and insolvencies that hit demand throughout the economy.