The V-shaped recovery marches on

LARGE swathes of the global economy are exhibiting traditional signs of a V-shaped recovery from the pandemic-induced collapse this spring. The monthly indicators for many countries show vigorous rebounds in June and July, with 10-15 per cent projected growth in real - that is, inflation-adjusted - gross domestic product (GDP) in the third quarter, all else being equal.

To be sure, there are reasons to question whether the perceived upturn is merely a technical bounce-back - an illusion caused by the sheer depth of the initial collapse. This could well be the case, especially if many countries suffer a strong second wave of Covid-19 infections, or if high hopes for an early vaccine turn out to be misplaced. No one can know for sure. We will have to wait and see the evidence as countries try to strike a balance between managing the virus and getting their economies back to normal.

Though the United States has struggled more than other countries with the virus, its rate of new infections nonetheless has fallen, making it more likely that its summer economic rebound will accelerate. And in China, the latest indicators point to a high level of infection control and an accelerating recovery. Given the dominant roles of the US and China in the global economy, such positive developments augur a major recovery for world trade, notwithstanding the two countries' ongoing conflict over trade and technology.