MACRO ECONOMIC NEWS

Hug The Wings You Spread My Dear

Wishing An Embracing Day Ahead

 

Best Regards

Arbind

 

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Macro-Economic News 12 Feb 2021

 

Speed is the essence of current circumstances, be it sliding into distress or stimulating the economy, or even bouncing back to vigor. Most likely than not, economic forecasts are bound to surprise even the best of minds. Eurozone, striving to push its recovery in line with the major economies, might bounce back sooner than earlier expectation of getting back to pre-pandemic level in 2023. Thanks to the economic resilience and resilience facilities causing the adrenal push of optimism. The US, structurally positioned of attracting resources (read money) from other economies, might find it difficult to rebuild the bridge, in its effort to maneuver the global economy. 

 

The UK, which has withstood the most impacts, may take another two years to get back on track with supports from marginally positive interest policies. Bank of England may extend its horizon for its near-zero interest regime; although it is unlikely that BoE will sail into a terrain having a negative borrowing cost.  

 

The budget deficit and revenue gap would dominate the world for most of 2021. Most economies would see a budget gap of nearly twice its economic growth; a case in point the US may see a massive 10% gap.   

 

The divergent policies of central banks (highlighted on 11 Feb) are aggregating unusual circumstances of money flow – in and out of the economy – causing unwarranted pressure on the effective (read forward) currency and interest rates. The only way out is to channelize domestic saving, and RBI has shown its intention very prudently (highlighted on 06 Feb). The central banks, especially emerging markets, would face casualty in dealing with multiple objectives and even maintaining the equilibrium.  

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