The economy of every country in the world has been affected by the COVID-19 pandemic — “No country has been left unscathed,” according to Alejandra Grindal, senior international economist for Ned Davis Research Group. As part of the 73rd CFA Institute Annual Virtual Conference, Grindal provided an assessment of the pandemic-induced global recession and the outlook for global equities.
Grindal predicts that no country is likely to return to pe-COVID levels any time soon, but we may already be seeing signs of who the clear winners and losers of this crisis will be.
The shape of recovery in the largest economies will vary depending on multiple factors, but a V-shaped recovery is not predicted for any country before a vaccine is available. Many economies were already struggling with weak growth before the pandemic, due to poor productivity growth and their demographic prospects.
Productivity growth and demographics may ultimately propel economies forward in countries with a better handle on the virus, driving a stronger recovery of equity markets. Grindal expects Europe and Japan to end up on the weaker side of the spectrum, while China, the US, Australia, and Vietnam will be on the stronger side.
Although the pandemic has provoked unprecedented fiscal and monetary policy responses around the world, with record stimulus efforts in Europe and the US, the mega-stimulus that might have been expected from China has been absent.
Grindal explained that the global economy is positioned for a deep recession, and analysts are watching the number of new virus cases per country along with other indicators, like China’s recovery and the rate of US layoffs, to get a sense of what markets will look like in the future. The long-term damage of the pandemic still remains to be seen.
This year, archived recordings of every presentation from the CFA Institute Annual Virtual Conference will be available online, with additional insights and commentary published on the CFA Institute Annual Virtual Conference blog.
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