A Tale of Two Economies: Pandemic dictates contour of GDP for 2021


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February 22, 2021

The KPMG Office of the Chief Economist has released its most recent economic analysis, A Tale of Two Economies: Pandemic dictates contour of GDP for 2021.

We encourage you to download the full analysis.  Some of the findings covered in the chartbook are:

  • As has been the case since the outset of the pandemic, the virus is dictating the economic outcomes. The faster governments can overcome the virus, the less economic scarring and the faster a full recovery can commence.
  • The economic and social response to the pandemic has not been uniform. Likewise, the geographies, industries, and household impact has not been uniform, leading economists to call the recovery “K” shaped denoting the upper and lower legs of the K as the relative performance of various geographies, industries and households.
  • Fiscal relief packages have been enacted in most countries and have been targeted towards those industries and households most impacted. Because the pandemic destroyed supply of goods and services due to lockdowns and decimated demand due to reduced propensity and capacity to consume, it is believed that relief efforts to date, though large, are unlikely to ignite runaway inflation.
  • Monetary policy is also highly accommodative and can be withdrawn gradually as the recovery progresses should inflation worries be justified by highly elevated consumption and wage growth.
  • Looking past the pandemic, it is possible that some of the shocks brought about by the pandemic, such as the technology shock, may endure in the years to come. Digital transformation at the corporate level has the possibility to buttress productivity gains and enable greater diffusion of productivity beyond the pandemic.

Due to the rapidly evolving nature of this situation, we update this analysis frequently. Please check back often for our latest report.


Constance L  Hunter

Constance L Hunter

Principal and Chief Economist, KPMG US

+1 212-954-3396

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