Economic Update March 2021
Summary
Stimulus drives recovery
Global economies have come through what appears to be the worst of the COVID-19 crisis, with continued policy support and the roll out of vaccines giving rise to an optimistic outlook. Although concerns around inflation have recently emerged,
driving uncertainty in equity and fixed income markets, central banks remain dovish and will likely keep easy policy in place for an extended period.
Bond yields are rising as economies recover 
Source: IFM Investors, Bloomberg, Macrobond
The recent sell-off in fixed income markets has been relatively sharp, reminiscent of the repricing before the previous global economic upswing in 2016 and the ‘taper tantrum’ of 2013. For economies such as Australia, these trends
represent an unwelcome tightening of financial conditions, especially with the Australian dollar rising as a global growth proxy. In the US, this tightening is even more problematic, with rising yields having greater potential to negatively
impact real economic activity.
While accommodative policy has prompted economic recovery, little has been done to address the underlying structural issues in advanced economies that have lowered potential growth rates. These include high private and public debt, lack of productivity
growth, a dearth of private investment and ongoing demographic challenges. Looking forward, reforms – not fiscal balances – need to become the focus.
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.