Posted inEurope

Economic recovery expectations split

Over three-quarters of respondents to a survey conducted by the CFA Institute think that the global economic recovery post-covid will follow a steady path or be K-shaped.

The survey, which was carried out in May, asked over 6,000 respondents how the sentiment about economic recovery in their markets could best be characterised.

Over four in 10 (44%) said that the recovery would be a ‘K-shape’, which the report’s authors defined as, “[…] different parts of the economy are recovering at different rates, times, or magnitudes”.

Just under a third (32%) said instead that the economy was on “a steady path”.

Fiscal stimulus

Interestingly, respondents were split on whether central banks should prioritise an exit strategy from accommodative monetary policy (51%) or not (43%).

The survey also found that the majority believe that equity markets had recovered too quickly with the aid of monetary stimulus and were now out of pace with the real economy. Respondents predicted a correction within the next one to three years.

When it comes to equities in their markets, 45% thought they had recovered too quickly, followed by 43% thinking that global developed market equities had done the same. Just 25% said similar about global emerging market equities.

There was less consensus on inflation. While nearly two-thirds (65%) believed that inflation will increase, those respondents were split between those who thought central banks would engage in restrictive policy (34%) or raise interest rates (31%). Conversely, a fifth thought that there would be no significant inflationary pressures manifesting within the next one-to-three years.

Inflation is currently a hot topic, with few agreeing on whether we are about to enter a period of high inflation. A recent survey of fund managers by Bank of America found that 93% expected higher inflation in the next year. But others, including Nadege Dufosse, global head of multi-asset at Candriam Asset Management, have said that any inflation bumps will only be for the short term.

Respondents to the CFA Institute’s study were largely from the US (2,504 of 6,040) and had been in the industry for more than 20 years. Over a third worked for asset management or investment firms. The company size of respondents was split fairly evenly between small, medium, and large institutions. The largest proportion (16%) of individual respondents were portfolio managers.

Pete Carvill

Pete Carvill is a reporter, writer, and editor based in Berlin who has been writing for the B2B and mainstream media since 2007. He is a contributing writer for Expert Investor and, in addition, has...

Part of the Bonhill Group.