The resurgence in coronavirus (COVID-19) infections presents renewed challenges to public health and the growth prospects of the euro area and global economies. Incoming information signals that the euro area economic recovery is losing momentum more rapidly than expected, after a strong, yet partial and uneven, rebound in economic activity over the summer months. The rise in COVID-19 cases and the associated intensification of containment measures is weighing on activity, constituting a clear deterioration in the near-term outlook.
Incoming data for the global economy point to a fast rebound of global activity in the third quarter, but also to slowing momentum. After a sharp contraction in the first half of 2020, the global composite output Purchasing Managers' Index (excluding the euro area) and high-frequency indicators rebounded considerably in the third quarter, albeit stabilising in September. In addition to weak labour market prospects, uncertainty is weighing on consumer behaviour. Global trade also recovered sharply in the third quarter, following the sharp and deep contraction in the second quarter. Global inflation remained low.