March 14, 2021
A financial professional, Chuck (Atsushi) Kawakami (pictured) reported today regarding the probability of the economic forecast seems to be still in a state of caution. MIRUPLUS pick up the analysis as follows;
The average economic outlook of global economists who anticipate the economy’s trend is becoming more optimistic, which underpins the global market.
Looking at the IMF's global economic forecast, the 2020 growth forecast for the global economy was -3.0% in April last year, -4.9% in June, and -4.7% in October. The conclusion is that the degree of deterioration was -3.5%, which was close to the level expected in April 2020, not as much as in June. Similarly, the global economic growth forecast for 2021 is + 4.8% in October, but is revised upward to 5.5% in the January revision.
To the contrary, private economists remain cautious in consensus compared to the IMF. For example, the IMF's January 2021 growth forecast for the United States was + 5.1%, and until recently, private economist consensus (Economist) was in the mid-to-late 3% range, but with data updates last week, it's finally been revised upward to 4.5%. Looking at past forecasts, the June forecasts have shifted excessively downwards (June -8.0%, January 2021 -5.8%) in all developed countries, and the fluctuations over time have been revised. To tell the truth, the width is large.
In any case, the U.S. economy in 2021 was initially expected to not reach the 2019 level, but both the current consensus forecast and the IMF forecast are in a scenario of a booming economy that exceeds the 2019 level. There is no doubt that the revision of the world's largest GDP scale has contributed significantly, and it will be a driving force for digital investment in the United States. Surveys by research houses such as McKinsey & Company are becoming more optimistic about the economy.
However, in the process of corona pandemic, overall efficiency has been improved, triggered by non-contact social requirements, and labor-intensive work has become a shift that emphasizes personnel efficiency.
It is not easy whether consumption, which accounts for about 70% of the U.S.GDP, and the employment-income situation that influences it can return to a situation close to full employment in 2019. Even if consumption, which is currently negative (-1.8% year-on-year in January), continues to be sluggish, it is necessary to keep an eye on whether investment will continue to increase to complement slow consumption.
Both economic forecasts and financial markets seem to have been somewhat overshooting optimism from a pessimistic view that the current situation went too far in the middle of last year.
Furthermore, even in the same forecast, in 2021, the Euro area and Japan will not reach the 2019 level, and the recovery is recovering, but no matter how the direction is, the probability of the forecast seems to be still in a state of caution in view of the excessive pessimism in the past.
Chuck (Atsushi) Kawakami
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