World – Macroeconomic Scenario for 2021-2022: painfully divergent trajectories
- 2021.02.07
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- Developed countries – Daring to dream (at least a little)
- Emerging countries – Uneven recovery
- Oil – Iran's return
- Monetary policy – No major urgency
- Interest rates – “This time, it's different”
- Exchange rates – The dollar's temporary advantage
- Economic and financial forecasts
In summary
Before we provide hasty diagnoses about the fallout from a crisis that will continue to impact us for some time, but that remains difficult to see (and analyse), there is cause for optimism in the short term. Growth is returning and strengthening. But let's save our enthusiasm for developed markets, given how fragmented emerging markets still are. US monetary tightening is expected to start earlier, and should remain gradual and measured: tapering first, then interest rates, and not before 2023. It is unlikely to set off any storms on the markets.
Despite the Eurozone's improved economic outlook and lower risks, the ECB is expected to maintain a highly accommodative monetary policy over the coming months, expanding the amount and the duration of the PEPP (which was supposed to end in March 2022) until the end of 2022. European sovereign bond yields are set to remain very low and could even drop further during the summer (lower volatility; carry trades; the ECB's June announcement of a "significantly higher pace" of securities purchases, to last into Q3; and the banking system's significant liquidity). Our scenario applies a German 10Y yield of -0.20% at end-2021 and -0.10% at end-2022, coupled with spreads that are still narrow in the ‘non-super core' countries.
Catherine LEBOUGRE, Economist