Analysts imagine a rumble that hasn’t been seen in four decades

Oxford Economics said in its forecast released Tuesday that it has raised its forecast for global growth for 2021 from 4.9 percent it had previously expected to 5.2 percent. This will be stronger growth than that achieved by the world economy after the global financial crisis in 2010 and will also exceed the pace of recovery from the recessions of the 1980s and 1990s respectively, writes MTI.

Average quarterly world growth for the next calendar year will be the highest since 1978.

The distribution of risks that determine the Oxford Economics benchmark forecast has changed significantly over the past month. The company has perceived strong downside prognostic risks for much of 2020, but the fact that at least three safe and effective vaccines have now been released has lessened several risk factors, including the risk of many more epidemic waves.

At the same time, the number of factors driving the forecasts has started to rise, according to the study.

The mood of company leaders has changed

Oxford Economics also conducted its latest global investor survey this year, which found that nearly three-quarters of market participants have become more optimistic in the past month. This is by far the biggest improvement in mood within the global corporate sector since the start of the coronavirus pandemic.

The 128 companies involved in circular issuance collectively employ 6 million people and have a combined annual turnover of approximately $ 2 billion. 57% of institutional investors and business leaders surveyed see the outlook in some way, 16%, much more favorable than at the time of the previous survey. Forty-two percent of companies now consider the risk distribution to be balanced; just over 20 percent answered the circular question above in this way.

The proportion of companies that perceive risks to be slightly downward has decreased from 51% to 33% and from 11% to 5% that perceive strong downside risks.

Respondents estimate the probability that global gross domestic product (GDP) will grow between 4 and 6 percent in 2021 to an average of 36 percent, although companies surveyed are likely to have weaker global growth performance overall on the next year. The companies surveyed see an average probability of 53 percent that global economic growth in 2021 will be slower than 4 to 6 percent.

The expected shape of the growth trajectory is also judged with caution by the companies and institutional investors surveyed.

• 44% of respondents, the largest individual group, are likely to have an ‘unfinished V’ – in other words, a square root growth trajectory, meaning a steep decline is initially followed by a recovery equally pronounced, and then growth stops and stagnates.

• 14 percent of market participants expect a W-shaped growth path, indicating a double bottom recession.

• The arc with less V shape, that is, after a sudden drop, is expected to be a steep arc that turns sharply and turns into continuous growth: only 11 percent of respondents expect this variant.