THE global economy is likely to recover to pre-pandemic levels by early next quarter, about three months earlier than previously expected, economists at Morgan Stanley said today.
“The evidence indicates that the virus/economy equation has shifted decisively from the early days of the outbreak,” they said in a note to clients, saying that the recovery has continued to gather momentum as countries get better at managing the virus.
The US economy could reach its pre-COVID 19 levels by the second quarter of next year, while the entire developed markets could reach that level by the third quarter of next year, they said.
Coupled with unprecedented levels of fiscal and monetary support and possible disruptions to trade, the prospective recovery is likely to be accompanied by stronger inflation, they said.
Meanwhile, Singapore state investor Temasek Holdings said that the global economic outlook remained volatile, with the coronavirus crisis and geopolitical tensions creating significant uncertainties in the near term.
Ranked among the world’s biggest investors, Temasek’s net portfolio value fell 2.2% to S$306 bil (RM931.76 bil) in the year to March 2020, the first drop in four years.
“The outlook for economic recovery remains clouded, despite significant fiscal and monetary policy support,” said Temasek head of financial services, Png Chin Yee, adding that unpredictable paths of COVID-19 and geopolitical issues posed significant uncertainties in the near term.
At a virtual news conference, senior executives from Temasek said the coronavirus pandemic had not significantly altered the firm’s investment strategy in the long term.
However, the crisis had accelerated structural trends that guide Temasek’s investment decisions, the investor said, such as those driven by demographic shifts and changing consumption patterns, as well as enabled by technological advances.
Temasek remains anchored in Asia, with exposure to the region of 66% measured by underlying assets, most of which are in China and Singapore. But the United States again accounted for the largest share of its new investments in the latest year. – Sept 8, 2020, Reuters
