K-shaped economic recovery anticipated indicating a distinct form of rebound

Key economic drivers likely to grow at different rates and in diverse ways globally

K-shaped economic recovery anticipated indicating a distinct form of rebound

K-shaped economic recovery anticipated indicating a distinct form of rebound

According to a survey, most CFA Institute members supposed that the economic recovery is forming a K shape. Based on the analysis, the economy is recovering from the Covid-19 pandemic at different rates and in different ways.

The global survey, accounting for 6,040 survey respondents from CFA partners, predicted a 44% K-shape divergent recovery. Last year the prediction of the economy was “hockey-stick shaped,” which has changed to the K-shape this year, indicating a distinct form of rebound.

Vidhu Shekhar, CFA, CIPM, Country Head, India, CFA Institute, says the pandemic will have a different impact in every area, including tax regulations, government policies, and the Indian financial landscape.

The organization surveyed locations where it has a presence between March 8 and March 28 of 2021. During the survey, India had not witnessed the severe second wave impact.

The analysis shows that 42 percent of the respondents find it to be ‘K-shaped,’ while 37 percent observed a steady economic recovery similar to the pre-pandemic pace. Another 11 percent predicted the economy to be ‘W-shaped,’ which might fluctuate after a strong rebound.

Moreover, 52 percent of the respondents find that the equity markets have gained high momentum with significant financial aid, but that impulse will gradually gain normalcy in 1-3 years.

China is proving to be a global leader in economic recovery in most markets, as respondents in China view a full recovery by three years. The emerging economies have depicted less optimism of economic rebound.

According to a report, United Nations raised the global economic growth forecast to 5.4% in 2021.

Lead author Hamid Rashid, chief of the Global Economic Monitoring Branch in the United Nations Department of Economic and Social Affairs, told the American economy is estimated to increase nearly 6.2% this year, marking its fastest growth since 1966. Additionally, the Chinese economy is likely to grow by about 8.2%.

Investments have known to be one of the primary drivers of economic recovery. The US saw only a 1.7% slump in investment last year. The forecast for next year by the UN is a growth of about 4.7%, which is higher than the IMF’s projection of 4.4%. The International Monetary Fund analyzed an upward trend in the Middle East and North Africa region, which is Real GDP growth of 4% in 2021.

According to Fitch Solutions, other drivers like consumer spending have a probability of rising 9.1% in 2021 in India. After the revision, the National Retail Federation anticipated growth in retail sales between 10.5 percent and 13.5 percent to more than $4.44 trillion this year in the United States.

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