20th April 2020

In the current climate, there is uncertainty in all of our lives with both health and financial concerns. However, while we are all understandably focusing on the here and now, it might be worth using this time to take a step back and review your long-term financial wellbeing as well. This newsletter takes a look at some of the areas you might want to consider. Of course, we are on hand to support you through any challenges ahead.

The latest batch of gross domestic product (GDP) figures shows the global economy faltered at the end of last year. While decisive policy action is providing support to growth, the economic fallout from the COVID–19 outbreak is likely to dent hopes of an imminent meaningful recovery.

2019 bows out on a low

Fourth quarter GDP data painted a bleak picture of the global economy at the turn of the year. In the UK, for instance, the economy stagnated with no growth at all, while the German economy barely registered any growth, and the French and Italian economies both shrank. Japan performed even more woefully, with the economy contracting sharply in the fourth quarter.

The US and China did perform more strongly, posting identical growth rates during the final three months of 2019 to those recorded during the preceding quarter. However, even in these two countries, the data confirmed a broader overall trend towards decelerating growth rates.

Policy action supporting growth

The US Federal Reserve and a number of other central banks cut interest rates during the second half of last year, and this monetary stimulus has provided some support to the global economy. Policymakers are also introducing other measures designed to foster recovery; in December, for example, Japan announced a $120bn stimulus package to shore up its ailing economy.

But COVID–19 will hamper recovery

The economic problems caused by the outbreak look set to hinder efforts to boost growth. While producing reliable estimates of the likely impact of the outbreak is extremely difficult, economists suggest China is facing a short-lived but potentially sharp economic shock. Given China’s significance on the global economic stage this, as well as the continuing spread of the disease, will undoubtedly have implications for growth across the rest of the world.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.