OECD: 2020's Set To Be Really Bad

OECD: 2020's Set To Be Really Bad

over 3 years ago2 mins

The OECD predicted on Wednesday that the global economy’s still headed for its biggest ever annual shrinkage, but it’s not all doom and gloom 🔮

What does this mean?

Things are bad, the OECD admitted, but not quite as bad as it thought they would be: the organization updated its annual forecast for this year’s global economic decline from 6% to 4.5%. And it’s not alone, with some major central banks having made their own less pessimistic predictions lately. Still, there are plenty of countries in varying levels of lockdown, and even those that aren’t might not see industries like travel and leisure recover any time soon – dragging down the global economy for years to come.

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According to the OECD’s forecasts, China’s the only major country that’ll grow its economy this year, albeit barely 🇨🇳 And while the organization still reckons the US and Europe will shrink, their actual declines probably won’t be as bad as when it made its predictions back in June. Prospects for emerging markets like India and South Africa, on the other hand, are only getting worse.

Source: Bloomberg
Source: Bloomberg

Why should I care?

The OECD’s update should be a positive sign for stock markets, which in theory reflect the wider economy. But investing heavyweight Blackstone doesn’t think that’ll hold up this time around 🤔 Government tax cuts, low interest rates, and ongoing central bank support have helped cushion the economic collapse and send stocks to record highs, but Blackstone reckons they’ll eventually give way to rising interest and tax rates. And given that high borrowing costs and taxes eat into company profits, that could limit share price rises over the next five to ten years.

Investors who share Blackstone’s concerns might now be looking elsewhere for returns – namely fine art, private equity, and other “alternative” investments 🖼 And with good reason: those once-exclusive assets are increasingly accessible to everyday investors via fintech platforms, as well as traditional investment managers.

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