Invest
COVID-19 recession on track for quick recovery
While the current recession is the sharpest since 1930, a new cycle of economic expansion has already begun, according to one economist, who has indicated it could also make this recession the shortest.
COVID-19 recession on track for quick recovery
While the current recession is the sharpest since 1930, a new cycle of economic expansion has already begun, according to one economist, who has indicated it could also make this recession the shortest.
Dr Bob Baur, the chief global economist for Principal Global Investors, has highlighted how China is leading the way to a COVID-19 recovery, which bodes well for metrics across the rest of the world.
“China was the first country to emerge from the COVID-19 lockdown, and data from its government notes economic improvement in March from the collapse in January and February,” he commented.
While consumer spending in the country “is still somewhat restrained” thanks to a lingering fear of infection, Dr Baur said “demand seems to be improving overall”.
This is coupled with a rush to reopen businesses across the United States, where a V-shaped upwelling occurred in May after its record April contraction.
And while the “early reopening energy will have dissipated” by September, Dr Baur is still expectant of further growth – just at a more gradual pace.
While March and April’s economic plunge had ended a 128-month period of expansion after a February peak, Dr Baur has expressed optimism in the short-term future of economic activity.
In the context of global macroeconomic data, the economist said it suggests a new cycle of economic expansion has already begun.
“While many are calling for a prolonged period of stagnation, economic data suggests the opposite, with a recovery already under way in much of the world,” he offered.
While an end date on the current recession is yet to be known, “it is likely that despite it being the worst since 1930, it may well be the shortest”.
So, what does this mean for your investments?
According to Dr Baur, “The continued revival of world growth should keep the equity uptrend intact at least for a while.”
Despite this, a lot of uncertainty does remain around the strength of the rebound into next year, as well as the potential for a second wave of virus activity.
Looking even further ahead, the economist flagged that stock valuations as well as bond prices are very high – signs that long-term financial returns may be far less than exciting.
“The best potential for robust long-term equity profits is a rotation into value and cyclical stocks, a reverse of the investment climate of the last decade,” he explained.
“For now, though, the recovery seems on track, and we’d stay fully invested commensurate with one’s tolerance for risk.”
“Stay optimistic for now,” he concluded.
About the author
About the author
Economy
Consumer confidence is quickly pushing Australia’s economy from recovery to expansion
Both Australian consumers and property investors came out of last month feeling pretty chuffed about the economy. ...Read more
Economy
4 Aussie cities among 10 most liveable in the world
This year’s global liveability score has been strongly influenced by measures taken to stem the spread of COVID-19, with cities ranked according to how successfully they dealt with the pandemic. Per...Read more
Economy
Australia attended the G7 as a ‘green laggard’, new report shows
Following a weekend at the G7, Australia has been labelled a “green laggard” as a consequence of letting its green competitiveness significantly slide over the past two decades. ...Read more
Economy
Melbourne’s lockdown ends tomorrow
As announced, Melbourne will begin its path out of lockdown as of 11.59pm Thursday evening, but some restrictions will remain. ...Read more
Economy
GDP slows to 60-year low
Australia’s gross domestic product per capita growth has fallen to its slowest pace in at least 60 years, with the massive government spending looking to come at a ‘great cost to future generation...Read more
Economy
Recovery falters just a month after JobKeeper ends
The end of JobKeeper has seen a rise in defaults and administrations, which could hamper Australia’s recovery from the COVID-19 downturn, new research has revealed. ...Read more
Economy
Frydenberg considers JobKeeper return for Victorians
The federal government has granted Victoria Premier James Merlino a chance to pitch his ‘JobKeeper style’ aid, but it has refused to acknowledge that Victoria’s predicament could be linked to fe...Read more
Economy
Australia’s economy is officially back to pre-pandemic levels
As most economists predicted, Australia’s economy is back to pre-pandemic levels, the latest official figures show. ...Read more
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Dissecting the budget and what it means for your equities, property and super
Listen now
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Economy
Consumer confidence is quickly pushing Australia’s economy from recovery to expansion
Both Australian consumers and property investors came out of last month feeling pretty chuffed about the economy. ...Read more
Economy
4 Aussie cities among 10 most liveable in the world
This year’s global liveability score has been strongly influenced by measures taken to stem the spread of COVID-19, with cities ranked according to how successfully they dealt with the pandemic. Per...Read more
Economy
Australia attended the G7 as a ‘green laggard’, new report shows
Following a weekend at the G7, Australia has been labelled a “green laggard” as a consequence of letting its green competitiveness significantly slide over the past two decades. ...Read more
Economy
Melbourne’s lockdown ends tomorrow
As announced, Melbourne will begin its path out of lockdown as of 11.59pm Thursday evening, but some restrictions will remain. ...Read more
Economy
GDP slows to 60-year low
Australia’s gross domestic product per capita growth has fallen to its slowest pace in at least 60 years, with the massive government spending looking to come at a ‘great cost to future generation...Read more
Economy
Recovery falters just a month after JobKeeper ends
The end of JobKeeper has seen a rise in defaults and administrations, which could hamper Australia’s recovery from the COVID-19 downturn, new research has revealed. ...Read more
Economy
Frydenberg considers JobKeeper return for Victorians
The federal government has granted Victoria Premier James Merlino a chance to pitch his ‘JobKeeper style’ aid, but it has refused to acknowledge that Victoria’s predicament could be linked to fe...Read more
Economy
Australia’s economy is officially back to pre-pandemic levels
As most economists predicted, Australia’s economy is back to pre-pandemic levels, the latest official figures show. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
