31 March 2021
A shot in the arm for the economy?
As we welcome 2021, Covid-19 remains front-of-mind given the economic damage inflicted last year as governments scrambled to flatten the infection curve. Read more
31st March 2021 - Asset Management
As we welcome 2021, Covid-19 remains front-of-mind given the economic damage inflicted last year as governments scrambled to flatten the infection curve. Successful vaccine development may not be a silver bullet, but the benefits are meaningful, and they should be a catalyst for an eventual return to economic normality.
Provided vaccines can become widely available by June this year, the Australian government is forecasting that the upside to GDP growth could be 1.5% by June 2022. This is based on less uncertainty in the population driving stronger consumer and business confidence, increased employment and increased spending.
Of course, vaccine production and delivery hiccups are almost inevitable. It’s a big challenge for health authorities, as is the communication that will be needed to convince as many people as possible to roll up their sleeves and get vaccinated.
New strains are an added complication and trials have of course not proven definitively that vaccines stop the transmission or for how long they remain effective. So, current public health measures will likely remain, especially in the short term. Despite the expected recovery, the total level of economic activity will thus likely still be lower than pre-crisis levels until at least 2022.
The risks however relate to the timing and intensity of the economic recovery rather than whether it will happen at all. As such, we expect short-term bouts of risk aversion as optimistic investors continually reassess their expectations. At the same time, improving economic conditions coupled with ongoing fiscal support and expansive monetary policies provide an attractive backdrop for risk assets as well as ongoing equity market rotation towards the cyclical growth sectors.
If you would like more information please call 1300 ELSTON or contact us to speak to one of our advisers.
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31 March 2021
As we welcome 2021, Covid-19 remains front-of-mind given the economic damage inflicted last year as governments scrambled to flatten the infection curve. Read more
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