CRU Economic Outlook: The Winter is Past, Flowers Appear

By CRU Principal Economist Alex Tuckett and CRU Chief Economist Jumana Saleheen, from CRU’s March Global Economic Outlook

In March, we received good news on the outlook for the world’s two largest economies: the U.S. stimulus package was larger than expected, and economic growth in China is stronger. We expect a temporary rise in inflation in 2021 reflecting (a) higher energy prices now compared to the low prices of 2020 and (b) a surge in spending as pent-up demand is released when lockdowns end. Further out, our view is that inflation will fall back towards central bank targets. Bond markets are less sure; they fear higher inflation and are uncertain about the path towards normalizing monetary policy. The path to global recovery seems more durable with each passing month, but risks remain.