Invest
Global economy predicted to pause before soaring in 2021
2021 will provide investors the opportunity to cash in on private markets and businesses hurt, but not permanently damaged, by the pandemic as accommodating policies and pent-up demand drive global growth, an asset manager has explained.
Global economy predicted to pause before soaring in 2021
2021 will provide investors the opportunity to cash in on private markets and businesses hurt, but not permanently damaged, by the pandemic as accommodating policies and pent-up demand drive global growth, an asset manager has explained.
JP Morgan Asset Management’s (JPAM) Global Alternatives gives a fairly robust forecast for the next 12 to 18 months across alternative asset classes, predicting a surge in late 2021 on the back of pent-up demand.
The analyst explained that the global economy is tipped to pause for the duration of the vaccine rollout, before accommodating policies are expected to bolster activity in the later part of 2021, a new research report has revealed.
“After the unprecedented events of 2020 and the ensuring economic recovery, jump-started by swift central bank action and fiscal stimulus, investors continue to hunt for yield to take advantage of underlying consumer strengths and resilient fundamentals across global economies,” JPAM’s head of alternatives, Anton Pil, said.
Mr Pil stressed that in this environment, “alternatives, perhaps once considered optional, have become essential”.
Among the policies expected to support growth in the global economy, in the short term, are Europe's shift away from austerity and the United States’ $1.9 trillion fiscal stimulus package.
“In general, 2021 should be a solid year for the global economy,” the report said.
“As populations around the world are vaccinated gradually during the first half of the year, economic activity should begin to accelerate.
“As the threat of the virus fades, we expect a material acceleration in the pace of services sector activity amid pent-up demand for restaurant dining, entertainment, travel and other services impacted by the pandemic.”
The asset managers believe investors will likely search for businesses that were temporarily disrupted by the COVID-19 pandemic, but have avoided long-term demand destruction from the goods or services they provide.
“This leads us to favour more cyclical assets in the short term, even as we continue to recognise the need for growth, income and diversification over the long run. The pandemic may soon come to an end, but this economic cycle has only just begun,” the report stated.
However, investors are being urged to remain cautious of economic headwinds that could occur with the pandemic still looming.
“As always, investors should understand the risks, particularly when everyone seems to be singing from the same song sheet.”
“Any lack of fiscal support or abrupt change in the tone of monetary policy could undermine the recovery and cause capital markets to stumble.”
“Challenges relating to the distribution of the vaccine and/or inoculation would almost certainly delay a complete economic recovery. And there is still a risk that the virus mutates in such a way that current vaccines become ineffective,” JPAM explained.
RELATED ARTICLES
-
Australia’s spending surprise raises the odds of a February rate move — here’s how to protect margin and momentum
-
Australia’s inflation cools to 3.4% — why the RBA’s next move still isn’t a lay‑up for business
-
Inflation cools to 3.4% — but the RBA’s reaction function keeps businesses on a knife-edge
About the author
About the author
Economy
Australia’s spending surprise raises the odds of a February rate move — here’s how to protect margin and momentum
Household outlays are running hotter than economists expected, with the latest ABS readings showing broad-based gains across services and goods. That resilience is exactly the kind of demand impulse ...Read more
Economy
Australia’s inflation cools to 3.4% — why the RBA’s next move still isn’t a lay‑up for business
Headline inflation easing is good optics; balance sheets feel something different. With year‑on‑year CPI down to 3.4% in November from 3.8%, hopes for rate relief are rising — but policymakers remain ...Read more
Economy
Inflation cools to 3.4% — but the RBA’s reaction function keeps businesses on a knife-edge
Australia’s headline CPI edged down to 3.4% year-on-year in November, from 3.8%, easing immediate pressure but not eliminating the risk of further tightening. With services inflation sticky and ...Read more
Economy
Higher-for-longer, not higher forever: How Australia’s inflation ‘surprise’ is rewriting CFO playbooks for 2026
Australia’s latest inflation pulse eased but didn’t budge bank outlooks: near‑term rate cuts are still a long shot, with some houses flagging upside risk. That steadier‑for‑longer cash rate is pushing ...Read more
Economy
Australia's inflation illusion: the real challenge lies in pricing power and productivity
Headline inflation has cooled to 3.4% year-on-year, but the Reserve Bank’s caution—and a still‑hot housing backdrop—mean the rate threat hasn’t left the room. For boards, the next few quarters are ...Read more
Economy
When house prices lift, tills ring: A case study in turning Australia’s wealth effect into growth
Australia’s latest upswing in household wealth, anchored by higher dwelling values, is more than a feel‑good statistic—it is a profit and planning signal. The ABS notes property’s centrality to ...Read more
Economy
RBA's hawkish stance reflects inflation concerns, State Street economist comments
In a recent statement, the Reserve Bank of Australia (RBA) has signaled a hawkish stance on interest rates, drawing insights from financial experts about the implications for Australia's economic ...Read more
Economy
Navigating the inflation maze: How CFOs can outsmart economic hurdles in Australia
Fresh inflation data have cooled expectations of near-term rate cuts in Australia, intensifying pressure on margins, capital allocation and demand. Rather than wait for monetary relief that may not ...Read more
Economy
Australia’s spending surprise raises the odds of a February rate move — here’s how to protect margin and momentum
Household outlays are running hotter than economists expected, with the latest ABS readings showing broad-based gains across services and goods. That resilience is exactly the kind of demand impulse ...Read more
Economy
Australia’s inflation cools to 3.4% — why the RBA’s next move still isn’t a lay‑up for business
Headline inflation easing is good optics; balance sheets feel something different. With year‑on‑year CPI down to 3.4% in November from 3.8%, hopes for rate relief are rising — but policymakers remain ...Read more
Economy
Inflation cools to 3.4% — but the RBA’s reaction function keeps businesses on a knife-edge
Australia’s headline CPI edged down to 3.4% year-on-year in November, from 3.8%, easing immediate pressure but not eliminating the risk of further tightening. With services inflation sticky and ...Read more
Economy
Higher-for-longer, not higher forever: How Australia’s inflation ‘surprise’ is rewriting CFO playbooks for 2026
Australia’s latest inflation pulse eased but didn’t budge bank outlooks: near‑term rate cuts are still a long shot, with some houses flagging upside risk. That steadier‑for‑longer cash rate is pushing ...Read more
Economy
Australia's inflation illusion: the real challenge lies in pricing power and productivity
Headline inflation has cooled to 3.4% year-on-year, but the Reserve Bank’s caution—and a still‑hot housing backdrop—mean the rate threat hasn’t left the room. For boards, the next few quarters are ...Read more
Economy
When house prices lift, tills ring: A case study in turning Australia’s wealth effect into growth
Australia’s latest upswing in household wealth, anchored by higher dwelling values, is more than a feel‑good statistic—it is a profit and planning signal. The ABS notes property’s centrality to ...Read more
Economy
RBA's hawkish stance reflects inflation concerns, State Street economist comments
In a recent statement, the Reserve Bank of Australia (RBA) has signaled a hawkish stance on interest rates, drawing insights from financial experts about the implications for Australia's economic ...Read more
Economy
Navigating the inflation maze: How CFOs can outsmart economic hurdles in Australia
Fresh inflation data have cooled expectations of near-term rate cuts in Australia, intensifying pressure on margins, capital allocation and demand. Rather than wait for monetary relief that may not ...Read more
