Advanced Economies are Struggling

Global economy continues to remain under pressure as Covid-19 comes back again. In the next 3-5 years, we will either have zero growth or slow growth for many economies. We are heading for stagflation, higher inflation, higher unemployment and lower growth. Many countries are struggling to come back, borders are closed, covid cases are rising, and economies are going into a deep recession. In my view, the global
economy will achieve sub-par growth with very little economic confidence in the macro architecture.

Covid will drag on till 2021 and the airline industry will witness very little movement from the travellers. Monetary policy is operating in a lag as it is becoming ineffective in the advance economies. Nominal rates are low but real rates are not low. Central banks don’t have room to manoeuvre.

 

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