Deutsche Bank bullish about a global economic recovery in 2021


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LONDON – Deutsche Bank advanced its global growth outlook for 2021, but warned that two major risks could still worsen the economic recovery from the coronovirus crisis.

In the bank’s latest report on Wednesday – titled “Hope on the Horizon” – Deutsche Bank researchers updated their calls in recent weeks due to “incredibly positive” coronavirus vaccine news, including pharmaceutical giants Pfizer, Moderna and AstraZeneca Everyone is saying that the vaccine candidates were highly effective in stopping Kovid-19.

Deutsche Bank’s Group Chief Economist David Folkest-Landau said, “With the efficacy rate at the upper end of expectations, it opens up the possibility of a much faster return than normal. The report states,” By the end of 2021, There may not be much impact on day-to-day life. “

With a vaccine on the horizon, Deutsche Bank said “it is likely that global GDP (GDP) will return to its pre-virus levels in the second quarter of next year.”

With the US economy shrinking 3.7% in 2020, the euro area has grown by 7.4% and China by 2.2%.

In 2021, Deutsche Bank forecasts that the US economy will grow by 4%, the euro area economy will shrink by 5.6% and China’s economy will grow by 9.5%.

Two major risks

The German lender warned that there are two major risks that could end this scenario, however.

Given the anti-vaccination movements and misinformation in recent years, the first risk is from the potential delay in leveling the virus curve as winter sets and the production, distribution and acceptance of the vaccine by the public.

Deutsche Bank expects to introduce comprehensive vaccination in advanced economies by the first quarter of 2021, and then to continue more widely in the second quarter. Nevertheless, it said “the great unknown is whether the population would accept vaccination and if the vaccine could be made mandatory”.

The World Health Organization already warned, back in 2019, that the vaccine inhibition was one of the top 10 threats to global health.

The second main risk is that “central banks and financial authorities have taken aggressive action, particularly in the US and Europe” to counter the economic crisis caused by the epidemic, relieving possible financial disruption.

“We see an increased risk of financial disruption from rising debt levels driven by increased proliferation of assets and necessary extremes, for which monetary and fiscal policy stimulus has increased,” the researchers said.

“Financial crises have often been touched in the past due to the inevitable shift from financial easing to policy easing, which is at least several years away, but may soon come as a surprise,” he said. ”

Market ideas

Deutsche Bank said its market views were not changed from its previous report: “We stick to our view that the S&P 500 is fully valued and rotates from a heavyweight stay-at-home mega cap to cyclical Is the main trade. ” European equity may mean a rare period of outperformance. “

Meanwhile, the US election result, in which a divided government (with Republicans likely to retain a majority in the Senate, while Democrats retain one in the House) appears to be the most likely outcome, “to the policy ambitions of the new administration. Will also disrupt, ”it said.

Nevertheless, Fokartes-Landau noted, if Democrats were to win the by-election in Georgia and take control of the Senate, a much larger fiscal stimulus could result. “So it will be a big focus in January,” he said.



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