Guernsey Press

Chill winds of pandemic are expected to warm

GUERNSEY should be set for a ‘relatively healthy path’ to recovery from the economic chill winds of the Covid-19 pandemic, according to a global investment expert.

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Christian Gattiker-Ericsson, global head of research at Julius Baer, on the left and Craig Allen, head of investment management at Julius Baer Guernsey, on the right. (28728830)

Christian Gattiker-Ericsson, Julius Baer’s global head of research, also said on a worldwide level that a steady economic recovery from the effects of the pandemic was the most likely outcome currently.

Addressing the Swiss management group’s biannual Guernsey market outlook event, he said: ‘I know that over in Guernsey your government has responded with economic support for businesses and individuals.

‘Fiscal support is absolutely crucial for recovery so the package, coupled with the island’s proactive lockdown measures and return to a form of normality, should set Guernsey on a relatively healthy path.’

He added: ‘Emerging economies are the ones that will struggle to provide effective fiscal packages, so we’re expecting further volatility in those markets.’

Mr Gattiker-Ericsson, who addressed the event via video link from Zurich due to travel restrictions, also outlined the prospects for economic recovery from the Covid-19 recession globally.

A steady recovery, he said, assumed that economies would adapt to living with the virus and a vaccination becomes available in 2021. This would result in ‘V-shaped recoveries’ for financial markets, following the lows of March this year, and continued monetary and fiscal stimuli from governments to support this.

Julius Baer’s modelling indicated that this outcome was 75% likely, though the percentages do shift frequently.

‘The real measure of recovery is when we can say that economies have returned to pre-crisis levels,’ said Mr Gattiker-Ericsson. ‘China was the first major economy into the crisis so it’s natural that they’re the first to come out the other side and return to where they were before. This indicates that the cyclical picture is improving, even if there’s still a long way to go for most other economies.’

The event, which was held at the Old Government House hotel in St Peter Port, also heard that market performance over the next quarter would be determined by the global economic recovery, the US election result, a move to more sustainable cities and the search for new asset classes offering portfolio stability.

‘The most crucial thing investors can do at this time is to ensure they have diverse portfolios that are invested globally. This crisis is a worldwide one so it’s having differing impacts on different markets; being widely invested is a way to mitigate that disruption,’ said Craig Allen, head of investment management at Julius Baer Guernsey.