InvestNow News – 4th September – AMP Capital – Quarterly Strategic Outlook – August 2020
Article written by AMP Capital – 18th August 2020
There are two concerns with expecting a recovery that sees activity and labour markets return to where they were prior to the onset of the virus. The first is the risk of a viral resurgence. This is already playing out to some extent in the United States and Australia, delaying re-opening efforts and likely leading to a slower pace of recovery over the remainder of the year. The second is a large number of firms will not make it out the other side of the COVID recover, with collateral damage from the shutdowns problematic in the period ahead.
The near-term outlook for inflation is to the downside, and looks set to remain well below central bank target levels for the next 18-24 months. Given the extent of the disinflationary pressure, policy rates are expected to remain at current levels for an extended period of time.
Policy support has come in the form of fiscal policy, both in terms of short-term support measures and longer-term recovery initiatives. However, many developed countries are now facing large budget deficits and sharply rising public debt profiles. This raises the question of debt sustainability and the risk of debt crises, particularly in developing economies.
Important notice: This communication has been prepared to provide general information and does not constitute ‘financial advice’ for the purposes of the Financial Advisors Act 2008 (Act). An individual investor should, before making any investment decisions, consider the information available in the relevant Product Disclosure Statement and seek professional advice. While every care has been taken in the preparation of this document, AMP Capital Investors (New Zealand) Limited and the AMP Group (together, ‘AMP’) make no guarantee that the information supplied is accurate, complete or timely and do not make any warranties or representations in respect of results gained from its use. The information is not intended to infer that current or past returns are indicative of future returns. The views expressed are those of the author and do not necessarily reflect those of AMP. These views are subject to change depending on market conditions and other factors.
InvestNow News – 4th September – AMP Capital – Quarterly Strategic Outlook – August 2020
Article written by AMP Capital – 18th August 2020
There are two concerns with expecting a recovery that sees activity and labour markets return to where they were prior to the onset of the virus. The first is the risk of a viral resurgence. This is already playing out to some extent in the United States and Australia, delaying re-opening efforts and likely leading to a slower pace of recovery over the remainder of the year. The second is a large number of firms will not make it out the other side of the COVID recover, with collateral damage from the shutdowns problematic in the period ahead.
The near-term outlook for inflation is to the downside, and looks set to remain well below central bank target levels for the next 18-24 months. Given the extent of the disinflationary pressure, policy rates are expected to remain at current levels for an extended period of time.
Policy support has come in the form of fiscal policy, both in terms of short-term support measures and longer-term recovery initiatives. However, many developed countries are now facing large budget deficits and sharply rising public debt profiles. This raises the question of debt sustainability and the risk of debt crises, particularly in developing economies.
Important notice: This communication has been prepared to provide general information and does not constitute ‘financial advice’ for the purposes of the Financial Advisors Act 2008 (Act). An individual investor should, before making any investment decisions, consider the information available in the relevant Product Disclosure Statement and seek professional advice. While every care has been taken in the preparation of this document, AMP Capital Investors (New Zealand) Limited and the AMP Group (together, ‘AMP’) make no guarantee that the information supplied is accurate, complete or timely and do not make any warranties or representations in respect of results gained from its use. The information is not intended to infer that current or past returns are indicative of future returns. The views expressed are those of the author and do not necessarily reflect those of AMP. These views are subject to change depending on market conditions and other factors.
