Reasons for economic optimism in the autumn months
Over the summer months, forecasting agencies took turns to upgrade their growth projections for developed nations as a succession of strong economic data was released. For example, in its latest assessment, the International Monetary Fund (IMF) increased its combined 2021 growth forecast for advanced economies by half a percentage point, primarily due to the success of vaccine rollouts and government stimulus measures supporting recovery. So, with the arrival of autumn, there are reasons to be optimistic, though future growth prospects are likely to be closely linked to the course the virus takes.
Uncertainties and risks
The IMF assessment did highlight a divergence in fortunes between rich and poor nations due to differing levels of access to vaccines. As a result, an offsetting downgrade across emerging markets and developing economies has resulted in the overall global growth forecast remaining unchanged.
Ongoing concerns surrounding inflation also persist, despite policymakers’ insistence that the recent upward trend in prices will prove to be transient. Furthermore, current levels of government and central bank spending can only be a temporary phenomenon and, when stopped, will certainly have an impact on growth.
Grounds for optimism
While the outlook is therefore expected to remain relatively uncertain, there are grounds for investor optimism. Market fundamentals remain comparatively strong, with earnings growth still being fuelled by pent-up demand as economies reopen, and companies start to invest again as the recovery continues to gather momentum.
Diversification remains vital
There is no question that the world is in a period of immense change, with issues relating to the pandemic, as well as sustainability, fundamentally changing the investment landscape. Some things, however, do not change, like the importance of holding a diversified investment portfolio and the need for expert financial advice. That’s where we come in.
The value of investments and income from them may go down. You may not get back the original amount invested. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.