Global Macro Service > Global Macro Themes And Asset Views Chartbooks

Global Macro Themes and Asset Views Chartbook, September 2020

In our global macro chartbook for September, we summarise our views on current global themes and asset markets, and link to our research highlights over the last month. Given the scale of recent revisions, our global GDP forecast remains relatively unchanged at -4.4% in 2020. This is the weakest rate since WWII and long-term scarring from the Covid-19 pandemic is highly likely.

We highlight our research on the impact that the ongoing global coronavirus outbreak will have on the global economy. Our analysis shows that since the Global Financial Crisis, globalisation has slowed weighing on economic growth, however we don’t expect globalisation to go into reverse after this year. Beyond 2020 a modest inflation overshoot in the coming years is still possible; but it would not be very damaging, given the substantial undershoots of the last decade.

Oxford Economics has conducted extensive regional analysis on the impacts of coronavirus and the effectiveness of policy responses to combat this recession. As we expected, the Fed formally adopted flexible average inflation targeting but we do not expect any change in policy rates until at least 2024. The EU’s response to the crisis has implications for monetary policy. Strong use of up to €700bn of concessionary EU loans would lower weak sovereigns’ interest burdens, while also facilitating the convergence of the ECB’s asset purchases towards the capital key.

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