- The last few years have seen a seemingly unending string of adverse shocks hit the world, disrupting the normal course of economic activity and, more generally, everyday life.
- And, while the New Year began with hopes of much-needed calm on the horizon, the last three months have seen the emergence of new downside risks that have weighed on anticipated growth momentum and reverberated through global financial markets.
- But, though it may well be the case that the outlook now is not as optimistic as it was a few months ago, with forecast confidence intervals widening and rising recession risks becoming a focal point of discussions, the backdrop is still far from dour.
- In fact, the base case expectation remains that global growth will be sustained at rates still notably above pre-crisis trends, with the pace of expansion likely to perk up in the coming months as pandemic-related restrictions are further scaled back and activity more broadly returns to pre-crisis levels.
- Add to that the fact that investor sentiment is highly depressed and year-do-date market weakness has made valuations more compelling, and it is arguable that there is still reason to fight back urges to materially scale back risk exposures at this juncture.
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