DBRS Morningstar Releases Commentary Updating Global Macroeconomic Scenarios

DBRS Morningstar released a commentary updating our global macroeconomic scenarios for select economies. These scenarios have been regularly updated to reflect the most recent developments relating to the global coronavirus (COVID-19) pandemic and its economic consequences.

The minor revisions to GDP numbers in our moderate scenario were for the most part to the upside. Q4 data was slightly better than expected in most of the countries covered, and forecasts for 2022 have gradually improved.

The optimism evident in consensus forecasts and in global equity markets seems to hinge on the continued deployment and effectiveness of vaccines. We continue to monitor risks of a more adverse outcome. The next few months could provide critical clues on the durability of the recovery, especially in countries with the highest vaccination rates.

“The experiences of Israel, the U.K., U.S., and other vaccination leaders could provide vital clues regarding the risks to the global economy in the months ahead,” notes Thomas Torgerson, Co-Head of Sovereign Ratings at DBRS Morningstar. “We remain concerned about the impact of new variants and future outbreaks of the virus.”

The effects of this pandemic will continue to play out for years to come. Non-performing debt is always a lagging indicator, and lag times may be increased given the magnitude of government support in response to COVID-19. Eventually, the world economy is likely to have to choose between some combination of budget austerity, higher inflation, or higher defaults. The debt always comes due.

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The commentary is available at www.dbrsmorningstar.com.

For more information on the impact of the Coronavirus Pandemic, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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