Weekly Market Insight

Latest Economic & Market Update 2nd December 2020

02nd December 2020

Good afternoon, it is December 2nd 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • OECD’s latest economic outlook.
  • Paschal Donohoe: “Lessons from Ireland shaping EU response to pandemic”

The prospects of a number of Covid-19 vaccines becoming widely available next year has lifted hopes of a faster recovery, but policymakers will need to retain both public health and fiscal support while acting decisively for the momentum to pick up, according to the OECD’s latest Economic Outlook released on Tuesday. Global GDP for Q4 is forecast to be 3% below the same period last year. With activity expected to remain restricted for the first half of 2021, the Economic Outlook forecast that the global economy is expected to gain momentum gradually as vaccines are rolled out in the first half of 2021. The OECD has forecast that global GDP will rise by 4.2% in 2021 following a 4.2% decline in 2020. China is forecast to account for over a third of this growth. The report highlighted how recovery will be uneven across countries and sectors, and could lead to lasting changes in the economy. It stated that countries that have effective testing, tracking and isolation programmes and where effective vaccines can be rolled out quickly should perform well. However, despite this, the report stated that a high degree of uncertainty remains. The outlook also provided upside and downside risks to its projections. The downside risk was that confidence may be hit if there are problems with distribution of the vaccines and unexpected secondary effects, which would revise the global GDP growth forecast downwards to about 1.5%. They suggested that the upside risk may be a release of pent up demand accompanied by accumulated savings reinforcing a rebound if vaccines become available and more quickly distributed. In this scenario global GDP growth for 2021 would be revised upwards to around 5%. (Source: OECD)

In an interview with the Irish Times, Minister for Finance Paschal Donohoe stated that lessons from Ireland’s economic crisis are shaping the EU’s response to the coronavirus pandemic. A “profound difference” in the approach of the EU to the Covid-19 crisis in comparison to the aftermath of the 2008 global financial crisis was noted by Mr Donohoe. Mr Donohoe hopes that spending to support businesses and incomes will prevent the build-up of bad loans that could weigh on economic growth. He stated that “we have experience in Ireland of what those challenges are” and that he is using the experience he has on these issues in Ireland to influence the direction of policy for those areas. There have been calls for the joint EU borrowing initiative, which would fund it’s €750 billion recovery, to be made permanent. Of these calls, Mr Donohoe said that he thinks that “we should only have this kind of common borrowing in dealing with common challenges of this scale” and that “outside of a crisis like this it is up to the national governments to fund national policies”. (Source: Irish Times)

Best & Worst Performers of Large Cap US Stocks on Tuesday
Click image to enlarge

Global Market Update
(as at close of markets 01/12/2020)