Economic recovery in sight in the summer

How we are strategically positioned: Get fist-hand insights on financial markets and macro trends in our Monthly CIO Update with Frank Häusler, Chief Strategist, and Reto Cueni, Chief Economist.

“Every Winter has its spring”

Largely due to the current lockdowns, we can expect a weak economy in the coming months. Our base scenario thus continues to be confirmed as previously outlined in our Investment Outlook 2021.

On the one hand, the economy should start to recover from the pandemic towards summer 2021. On the other hand, inflation will rise already before but also during this recovery phase, with the USA being more strongly affected than the Eurozone. According to our baseline scenario, we assume that central banks will continue to pursue a loose monetary policy, which should help the financial markets.

Although the base scenario looks promising, certain risks nevertheless remain.

Four risks that remain:

• The weakening of financial markets due to a stronger than expected inflation spike
• A faster reduction in expansionary monetary policy as a result
• Stronger second-round effects of the pandemic, for example bankruptcies and job lay-offs
• Extended lockdowns which continue to limit the economic recovery