Select your client type BE, English About Responsibility Capabilities Views Contact Search English About us Company news Aviva Investors expects a strong economic recovery in the second half of the year and into 2022 20 July 2021 (London) Aviva Investors, the global asset management business of Aviva plc, expects a rapid and broad-based recovery from the COVID pandemic in the rest of 2021 and in 2022. PDF 5.3 MB 24 PAGES House View Q3 2021 Global growth should exceed 7% this year and around 4.5% next, with risks assessed to be on the upside for both. The virus will remain with us for some time, but the worst disruption from lockdowns is over, vaccination efforts are well advanced, people and companies have adapted well, and policy support has remained in place. Re-opening of economies has led to a sharp revival in demand and supply has struggled to keep up, leading to frictional bottlenecks that have resulted in the emergence of some inflationary pressures. Much of this is expected to be transitory, but underlying inflation will probably be a little higher than just before COVID struck. Monetary policy is therefore expected to remain supportive throughout the rest of the year and next, with recent changes in approach to meeting their inflation objective allowing central banks to keep policy looser for longer. Emergency levels of fiscal support will be steadily withdrawn as economies re-open, but more activist government spending initiatives are set to increase, especially in the US, with the green and digital agendas likely to be key elements Michael Grady, Head of Investment Strategy and Chief Economist at Aviva Investors, said: “Our constructive view on a reflationary outlook, alongside ongoing policy support, leads us to prefer to be overweight equities, with a bias to the US and UK. This is balanced by an underweight in emerging markets which may face headwinds from higher US bond yields, weaker local currencies and tighter domestic monetary policy. “We expect the growth and inflation outlook to put some upward pressure on long-term sovereign bond yields, with the Fed in the US sticking to its new average inflation targeting regime. As such, we prefer to be somewhat underweight duration, mainly through US treasuries. “The upside from tighter credit spreads appears to be limited, given the narrowing already seen, so we prefer to be slightly underweight investment grade and neutral high yield. Overall, we have a neutral view on currencies.” House View Q3 PDF 5.3 MB 24 PAGES Aviva Investors expects a rapid and broad-based recovery from the COVID pandemic in the rest of 2021 and in 2022. DOWNLOAD For more information contact: Katie Ormrod Aviva Investors Media Relations Phone +44 7385 370719 Email Katie.Ormrod@avivainvestors.com Steve Ainger Head of Media Relations Phone +44 20 7809 8452 Email steve.ainger@avivainvestors.com Important information The information and opinions contained in this document are for use by the financial press and media only. No reliance may be placed for any purpose on the information or opinions contained in this document nor should they be seen as advice. The press release is provided on the basis that Aviva Investors Global Services Limited is not causing the communication of a financial promotion under exemption of the Financial Promotion Order, as Aviva Investors Global Services Limited has no control over the way in which an article based on this press release is prepared and published by the financial press and media. 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