AS I WRITE THIS, early in 2021, it’s fair to say that the global economic outlook seems more stable than it was last March amid the COVID-19 pandemic: Vaccines are gradually being made available around the world, central banks have brought stability and liquidity to global markets, and governments worldwide have introduced some of the largest fiscal stimulus packages in modern history.
And yet, tremendous uncertainty persists, The strength of the global economic recovery depends on the speed at which COVID-19 vaccines can be distributed, and the scope for further fiscal spending depends on the outcome of delicate political negotiations in each country. Meanwhile, the resilience we’re seeing in the financial markets may be limited by when investors believe central banks might start to roll-back quantitative easing (QE).
What, then, constitutes a reasonable base case for 2021? Our outlook comprises four key themes: a year of two halves; a K-shaped recovery; a temporary spike in inflation; and the continued search for yield. Within this very reasonable consensus, and, dare we say it, uninspired base case, we find ourselves monitoring a number of non-standard themes and ideas — macro disruptors that were either borne out of — or came into prominence as a result of — the COVID-19 outbreak.
Although we’re
