Gloomy global outlook

The global economy suffered a severe contraction in the three months through June, and it is becoming clear that the strength of its recovery will depend on authorities’ success in dousing continued pandemic flare-ups.

Countries’ freshest economic-growth figures, to be released in coming weeks, are likely to show the global economy entered a recession in the first half of this year and shrank in the second quarter at the fastest peacetime rate since modern records began after the Great Depression.

The global economic recovery has begun, but there are mixed signals about its health and staying power. Some sectors have sprung back to life more decisively than expected, and they include retailing and manufacturing. The flip side is it appears that, until a vaccine becomes widely available, surges in coronavirus infections will repeatedly have a damping effect on activity.

“In the absence of a medical solution, the strength of the recovery remains highly uncertain,” said Tao Zhang, deputy managing director of the International Monetary Fund.

The European Commission estimates the eurozone’s gross domestic product in the three months through June was 13.6 percent lower than in the first three months of the year, when output dropped 3.6 percent — then the largest decline since records began in 1995.

In the US, the Federal Reserve Bank of Atlanta on July 9 estimated that GDP declined 10.3 percent in the second quarter compared with the first quarter. If that were to prove accurate, the drop would be four times larger than that seen in the worst quarter for the economy after the 2008 financial crisis. At the start of June, the model was suggesting that GDP would fall by almost 18 percent.