Global Economic Outlook
- Global economic growth estimates for 2020 have been completely upended by the Covid-19 pandemic. So, instead of growth picking up pace in 2020, it is now likely to halve; and there are downside risks to that forecast.
- Policy responses have been swift but the scale of restrictions and halt in economic activity means that many countries will record negative growth for this year.
Emerging Markets Outlook
- Covid-19 is the sort of crisis that may, for now, negate many of the structural long-term advantages of emerging market economies while accentuating their shortcomings.
- Given wide dependence on commodities, lower global demand raises the risk that deteriorating fiscal and external balances drive currency depreciation, with knock-on implications for debt obligations.
Global Capital Markets
- Near-term volatility will likely linger and a re-opening of the global economy will not happen overnight, but excessive fear coupled with an unprecedented policy response leads us to a constructive outlook for equities.
- Bond market forecasts adjusted to incremental economic data are likely to provide murky indications of future market conditions. Investment grade corporate bonds look attractive amid improving sentiment, liquidity and policy support.