Newspaper headlines continue to highlight how the Covid-19 pandemic is still raging and the mayhem it is causing. These concerns about the pandemic have led many institutions, such as the Asian Development Bank, to issue decidedly downbeat forecasts for the world economy, thus adding to the gloom. But this pessimism might be overdone. After all, there are several lead indicators that point to a decent recovery in the big economies that essentially determine where the global economy is heading. Moreover, we find that the forces that are shaping this recovery are durable. Even with this recovery though, Asia faces some headwinds. In particular, recovering demand in large economies may not translate into stronger Asian exports because the appetite for foreign goods in those countries seems to be falling. And that means that governments in Asia still need to maintain policy support to ensure that the recovery is sustained.

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