Economic Update December 2020
Summary
It’s not over just yet
Globally, a surge in COVID-19 in Q4 will weigh on near term growth, although the announcement of promising vaccines has provided some light at the end of the tunnel. We believe policy will need to remain extremely accommodative as economies adjust
to a ‘new normal’, with fiscal policy doing most of the lifting given monetary policy has been stretched to its limits.
Global equity markets in 2020
Markets remain relatively optimistic on 2021 growth
Sources: IFM Investors, Macrobond
Equity markets have continued to recover, but the question is whether this confidence is warranted going into 2021? Only time will tell, but our economic outlook remains cautious, particularly in the near-term. This is because of resurgent COVID-19
case numbers throughout the US, UK, and the Eurozone in particular, as we enter the Northern Hemisphere winter.
Australia is an outlier among the advanced economies. The material second wave of COVID-19 in Victoria has been effectively handled. The pain of the required restrictions hit the economy in Q3 but the Australian economy should outperform in Q4
as other countries are again being impacted by the virus, while Australia continues to open up. In the absence of a further outbreak, we should see some consistent growth heading into 2021. But this will need to be supported by ongoing and
aggressive policy support.
About the author
Chief Economist
Alex Joiner, PhD
Joined in 2016
Alex Joiner is Chief Economist at IFM Investors. He is responsible for the firm’s economic, financial market and geopolitical risk analysis that is key in IFM’s investment process. In this capacity he engages with IFM’s domestic and global clients on macro-investment trends and themes. He is a frequent commentator on economic and markets via traditional and social media and regularly speaks at public forums and conferences. He has over two decades of professional experience in economic and markets and prior to joining IFM was the Chief Economist at Bank of America Merrill Lynch (Australian & New Zealand) after being a senior economist at ANZ Bank. He holds a First Class honours degree in Economics and a PhD in Econometrics from Monash University. Alex is also committee member of the Australian Business Economists.
About the author
Economist
Frans van den Bogaerde, CFA
Joined in 2019
Frans supports the Chief Economist with the firm’s economic, financial market, and policy analysis and forecasting. He holds a Bachelor of Commerce (Finance & Economics) with Honours in Finance (First Class) from the University of Melbourne. Prior to joining IFM Investors Frans was undertaking his Honours degree and was a researcher with the Brain Mind and Markets Lab at the University of Melbourne.