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October 27, 2020

Why global GDP growth forecast is misleading

By Paul Dennis

27 October

Experts and analysts have forecast global GDP to grow at more than 30% in the third quarter.

However, as countries across the world struggle with rising unemployment rates and struggling business sectors, these figures may not indicate true growth.

David Wessel, director of Hutchins Center on Fiscal & Monetary Policy, shared an article on how third quarter GDP figures may be misleading.

Analysts have projected a growth rate of more than 30% in the third quarter, although these figures may not translate into actual growth.

The global economic growth may still be 4% lower than that in 2019, even if the projected 30% growth is registered as forecasted by analysts.

Further, growth data in the US is reported on an annualised basis and any changes in growth can be misleading.

Considering the low level of growth rates in the previous two quarters, any growth in the third quarter may seem huge.

The article notes that the ideal way to look at GDP growth is to measure other factors such as the number of hours worked, which are still low and unemployment rates, which continue to grow.

Direct action will be needed to address these issues and stimulate growth, the article noted

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