The economy is in the midst of a recession triggered by a health crisis. That makes this recession unusual and different. Here we examine how this recession compares to previous recessions. From that we infer key features of the pandemic recovery. We conclude that demand in most commodity end-use sectors – construction and manufacturing – is likely to be more resilient than normal, because the COVID-19 recession is primarily a service sector recession. The automotive sector is an exception, however, and experiences a slower recovery in light of the structural challenges it faces with respect to climate policy.

Forecasting relies on historical relationships and judgements about the future. In 2020 the global economy was hit by a once in a 100 year pandemic. In these unusual times we expect the pandemic recovery to be different to the past and display five key features.

Table 1 sets out what one would normally expect during a global recession, key observations about the current recession, and our inferences about the nature of the recovery from the pandemic. We highlight five features, with emphasis on the end use-sectors that matter most to the commodity industry. These features correspond to those shown in Figure 1. 

Consumer services sectors bear the brunt of COVID-19

It is well known that COVID-19 has hurt economic activity in the consumer service sectors by more than it has hurt manufacturing and construction. The main reason is that social distancing is hard to achieve in these sectors. Take for example, travel, eating out, cinemas and shopping – these activities tend to occur with large groups of people, risking virus spread. Figure 2 shows that the consumer service sectors – wholesale, retail and entertainment and arts and entertainment - accounts for about a third of total employment in the EU and the USA. The jobs and income of these workers remain at risk until a vaccine is round, which would allow businesses in these sectors to return to normal.

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https://www.crugroup.com/knowledge-and-insights/spotlights/2020/five-features-of-the-pandemic-recovery/