In Q3-2021, global recovery was largely premised on improving vaccinations rates, expansionary fiscal and accommodative monetary policy adopted by major central banks. Also, the gradual reopening of economies has sparked growth sentiments. The IMF stated it anticipates the global economy to grow by 5.9% in 2022.

Unsurprisingly, the rebound in economic sentiments has supported strong demand for risk assets like equities. The MSCI World Index has gained 12.5% YTD (as at 30-SEP). Demand has been broad-based in the US market, as the Dow Jones, S&P 500 and the Nasdaq gained 16.9%, 12.0% and 13.8%, respectively  in 2021.  Looking ahead, our views for growth remain robust, and tally with the International Monetary Fund (IMF) recent growth projections for 2021. We expect the global economy to continue the path of sustained growth.

Looking ahead into Q4-2021 and beyond, one major downside risk is in regards to the expected grossly uneven growth between wealthier economies and low-income economies. This is because we expect these wealthier economies to have better access and financial viability to finance widespread vaccinations. Lastly, in Q4-2021 and into 2022, we expect record stimulus measures adopted by wealthier economies to slow, given their more robust economic recovery. Also, recent inflation figures for the US economies came in at 5.4%, its highest level since Aug- 2008. Rising inflation pressures coupled with the Feds’ signal of tapering has led to yields in the US rising last week to 1.67% levels for the 10-year paper, the highest levels in four (4) months. As investors sold-off treasures demanding higher compensation for risk, this raises the potential of major central banks tightening, which could lead to a stronger greenback, leading to capital outflows from emerging and frontier markets.

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