Quarterly Outlook: December 2020

The December 2020 Quarterly Outlook highlights include:

• Governments reintroduced stringent containment measures to bring a second wave of Covid-19 infections under control. Fortunately, vaccine development and approval made good progress. Currently, vaccination programs are starting up and are to bring the relief needed for the economy to return back to normal
• In the fourth quarter, financial markets continued their rebound, and several equity markets reached new highs in response to positive developments around several downside risks. Going forward, the Ortec Finance Momentum Indicator signals equity markets to lose momentum in the coming year
• Due to Covid-19‘s second wave, the macroeconomic environment deteriorated more than anticipated which worsened the outlook of the Ortec Finance Business Cycle Indicator. Supported by the ongoing extensive fiscal and monetary stimulus, we assume that the global economy continues its recovery in the course of 2021
• The pandemic’s economic impact, however, remains highly uncertain and the economic recovery remains fragile. The major downside risk is a prolonged or stronger impact on economic activity, for example caused by a resurgence of infections, challenges with the vaccine’s rollout, as well as the vaccine efficacy across age groups
• In light of developments in recent years including the continued low economic growth, inflation and interest rates, and diminishing consensus about where the economy is going, we lowered our long-term expectations for growth, inflation, interest rates and asset returns, and increased the uncertainty around our long-term outlook.

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Previous Quarterly Outlook

Interested in our previous quarterly outlook? Download the September 2020 Quarterly Outlook here.