Global markets
Global worries over rising and tenacious supply-side inflation has spooked markets, and driven up bond yields. However, consumer demand remains strong even in the face of a surge in cases and deaths from the COVID-19 delta variant, underpinning the outlook for corporate profits. China continues to show signs of moderating growth, and the regulatory threat confronting Chinese growth stocks is unlikely to dissipate in the near term.
Canada
Canada’s high level of COVID-19 vaccinations and generally strong compliance with pandemic health measures give us optimism that the economy will continue to grow into 2022. Jobs have largely recovered to pre-pandemic levels, generous fiscal and monetary policy is still in place, and, while consumer spending has been held back by supply issues, demand remains firm and poised to grow.
United States
The U.S. Federal Reserve remains determined to ignite growth in the world’s largest economy through historically low interest rates and massive asset purchases, or Quantitative Easing (QE). While supply-chain issues and labour woes could sustain higher inflation levels, consumer and business demand remains sharply elevated, setting up solid growth for the rest of the year and beyond.
Europe
The region continues to struggle to get back to its pre-pandemic economic levels, and certain key leading indicators have recently peaked. Energy supply issues for two of the continent’s biggest economies – Germany and Great Britain – risk exacerbating rising inflation. However, there continues to be strong policy support from governments and central banks, which should dampen the downside.
Emerging markets
The more limited EM fiscal and monetary policy response means that EM central banks may have an easier time navigating their way out of the pandemic, although the slow rollout of vaccination programs is likely to tamp down growth and require more government support in the months ahead. Asian economies are expected to expand gradually, with growth gaining momentum amid rising demand for exports and increased domestic consumption.
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