SINGAPORE (July 14): The world economy has begun to rally somewhat due to the re-opening of economies in several countries, but the analysts at Fitch Solutions aren’t fooled. With several countries including the US and China imposing a second round of localised lockdowns and even closing internal borders in the case of Australia, a return to unemployment could await the global economy as intermittent locking and unlocking saps momentum from the world’s nascent recovery.  

While Fitch reduced its global growth forecast slightly from 3.6% to 3.9% since June, it has been the first time in months that the research house has been able to make upward revisions to their growth forecasts. The analysts believe that risks are starting to become more balanced compared with several months ago due to global re-opening, though they admit that considerable downside risks continue to plague the Covid-19 economy. Expansionary fiscal and monetary policy is likely to continue into the medium term. 

Despite growing Covid-19 cases -- especially in the US -- Fitch believes that people will learn to live with the increased health risks and there exists little political will to renew nationwide lockdowns as governments attempt to support their flagging economies. Nevertheless, there remains the possibility of localised lockdowns taking place as countries look to balance the need for economic recovery with public health concerns, resulting in a bumpy and uneven recovery. 

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