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Chief economist update: Global healing?

"You're Marines now. You adapt. You overcome. You improvise."
- Heartbreak Ridge

The coronavirus pandemic has been likened to a war. US president Trump called it "the invisible enemy", French head of state Macron declared that France was "at war", India's prime minister, Narendra Modi, compared it to Mahabharata (The Great War), and Chinese supremo, Xi Jinping called it the 'People's War'.

We may not all be "marines now" as Clint Eastwood's character Gunny Highway in the 1986 war film, central bankers, fiscal authorities, businesses and us, ordinary men and women, are learning to adapt, overcome and improvise.

So much so that while the number of cases of infection and deaths continue to increase worldwide, global economic activity has thawed from the deep freeze that plague almost the entire planet earlier this year.

This is underscored by the continuing recovery in the JP Morgan Global Composite PMI - the survey tracks a total of 27,000 manufacturing and services companies, in over 40 countries that account "for 89% of global gross domestic product (GDP)".

The latest reading from the survey showed the composite index rising to a reading of 52.4 in August - the highest level since March 2019, the fourth straight month of improvement and the second consecutive month the index had been in expansion - after its drop from a record low 26.2 reading back in April this year.

Both the manufacturing and services sectors expanded, to 28- and seven-month highs, respectively.

According to JP Morgan, "Growth was underpinned by rising levels of incoming new work, as lockdowns and restrictions in response to the coronavirus disease 2019 (COVID-19) were eased in many territories".

Not only that, the IHS Markit Global Sector PMI survey "signalled strengthening growth in a number of global sectors in August, led by healthcare services, automobiles & auto parts and real estate. Only five sectors registered falling business activity during the month, with tourism & recreation the bottom-ranked sector. Moreover, seven sectors registered an increase in employment during August, the highest number since February".

Yes Virginia, the re-opening and easing of restrictions in much of the globe, along with fiscal and monetary support, has helped.

However, the fat lady hasn't sung yet. Europe is now on the brink of a second wave and infections and deaths continue to increase in the US and in India, among others that are already prompting renewed containment measures.

Then again, as the European Central Bank (ECB) staff recently noted, "By virtue of the experience gained on how to deal with the pandemic, these responses are assumed to become more efficient, implying lower economic costs than in the initial wave".

Read our full COVID-19 news coverage and analysis here.

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