Markets in a Minute
Animated Map: An Economic Forecast for the COVID-19 Recovery (2020-21)
This Markets in a Minute Chart is available as a poster.
This Markets in a Minute Chart is available as a poster.
COVID-19 Recovery: A Global Economic Forecast
As governments enact COVID-19 containment measures, economies around the world have slowed to a crawl. Many people find themselves out of work, and businesses are struggling to stay afloat amid strict regulations and plummeting demand.
However, while current economic conditions are bleak, some forecasts for the upcoming recovery provide room for investor optimism. According to the most recent forecast from the International Monetary Fund (IMF), it’s projected that the global economy will contract by 3% in 2020, followed by 5.8% growth in 2021.
In today’s Markets in a Minute from New York Life Investments, we take a look at the country-level economic forecast to highlight which areas may recover the fastest.
Emerging from The Great Lockdown
Given the numerous uncertainties COVID-19 brings, preparing an economic forecast was no easy task. The IMF’s most recent projections assume that the pandemic fades in the second half of 2020, containment efforts are gradually unwound, and governments provide policy support.
With this in mind, which countries are expected to see the strongest recoveries? Below is the full country-level forecast, sorted by projected real GDP growth in 2021.
Real GDP, Annual Percentage Change
2019 Actual, 2020-2021 Projected
| Jurisdiction | 2019 | 2020P | 2021P |
|---|---|---|---|
| Libya | 9.9 | –58.7 | 80.7 |
| Macao SAR | –4.7 | –29.6 | 32.0 |
| Palau | 0.5 | –11.9 | 14.4 |
| Maldives | 5.7 | –8.1 | 13.2 |
| Aruba | 0.4 | –13.7 | 12.1 |
| Bangladesh | 7.9 | 2.0 | 9.5 |
| China | 6.1 | 1.2 | 9.2 |
| Malaysia | 4.3 | –1.7 | 9.0 |
| Côte d'Ivoire | 6.9 | 2.7 | 8.7 |
| St. Kitts and Nevis | 2.9 | –8.1 | 8.5 |
| Djibouti | 7.5 | 1.0 | 8.5 |
| Latvia | 2.2 | –8.6 | 8.3 |
| Lithuania | 3.9 | –8.1 | 8.2 |
| Indonesia | 5.0 | 0.5 | 8.2 |
| Niger | 5.8 | 1.0 | 8.1 |
| Mongolia | 5.1 | –1.0 | 8.0 |
| Albania | 2.2 | –5.0 | 8.0 |
| Antigua and Barbuda | 5.3 | –10.0 | 8.0 |
| Kyrgyz Republic | 4.5 | –4.0 | 8.0 |
| Seychelles | 3.9 | –10.8 | 8.0 |
| Estonia | 4.3 | –7.5 | 7.9 |
| Philippines | 5.9 | 0.6 | 7.6 |
| Belize | 0.3 | –12.0 | 7.6 |
| Guinea | 5.6 | 2.9 | 7.6 |
| Czech Republic | 2.6 | –6.5 | 7.5 |
| Myanmar | 6.5 | 1.8 | 7.5 |
| Kosovo | 4.0 | –5.0 | 7.5 |
| Serbia | 4.2 | –3.0 | 7.5 |
| India | 4.2 | 1.9 | 7.4 |
| Iraq | 3.9 | –4.7 | 7.2 |
| Barbados | –0.1 | –7.6 | 7.1 |
| Malta | 4.4 | –2.8 | 7.0 |
| Fiji | 0.5 | –5.8 | 7.0 |
| Vietnam | 7.0 | 2.7 | 7.0 |
| North Macedonia | 3.6 | –4.0 | 7.0 |
| Uzbekistan | 5.6 | 1.8 | 7.0 |
| St. Lucia | 1.7 | –8.5 | 6.9 |
| Botswana | 3.0 | –5.4 | 6.8 |
| The Bahamas | 1.8 | –8.3 | 6.7 |
| Rwanda | 10.1 | 3.5 | 6.7 |
| Montenegro | 3.6 | –9.0 | 6.5 |
| The Gambia | 6.0 | 2.5 | 6.5 |
| Turkmenistan | 6.3 | 1.8 | 6.4 |
| Ireland | 5.5 | –6.8 | 6.3 |
| Guyana | 4.7 | 52.8 | 6.3 |
| Algeria | 0.7 | –5.2 | 6.2 |
| Australia | 1.8 | –6.7 | 6.1 |
| Cambodia | 7.0 | –1.6 | 6.1 |
| Thailand | 2.4 | –6.7 | 6.1 |
| Grenada | 3.1 | –8.0 | 6.1 |
| Yemen | 2.1 | –3.0 | 6.1 |
| Chad | 3.0 | –0.2 | 6.1 |
| Kenya | 5.6 | 1.0 | 6.1 |
| Denmark | 2.4 | –6.5 | 6.0 |
| Iceland | 1.9 | –7.2 | 6.0 |
| Bulgaria | 3.4 | –4.0 | 6.0 |
| Benin | 6.4 | 4.5 | 6.0 |
| New Zealand | 2.2 | –7.2 | 5.9 |
| Eritrea | 3.8 | 0.1 | 5.9 |
| Ghana | 6.1 | 1.5 | 5.9 |
| Mauritius | 3.5 | –6.8 | 5.9 |
| Burkina Faso | 5.7 | 2.0 | 5.8 |
| Cyprus | 3.2 | –6.5 | 5.6 |
| Lao P.D.R. | 4.7 | 0.7 | 5.6 |
| Guatemala | 3.6 | –2.0 | 5.5 |
| Tajikistan | 7.5 | 1.0 | 5.5 |
| Cabo Verde | 5.5 | –4.0 | 5.5 |
| São Tomé and Príncipe | 1.3 | –6.0 | 5.5 |
| Senegal | 5.3 | 3.0 | 5.5 |
| Slovenia | 2.4 | –8.0 | 5.4 |
| San Marino | 1.1 | –12.2 | 5.4 |
| St. Vincent and the Grenadines | 0.4 | –4.5 | 5.4 |
| Chile | 1.1 | –4.5 | 5.3 |
| Germany | 0.6 | –7.0 | 5.2 |
| Sweden | 1.2 | –6.8 | 5.2 |
| Peru | 2.2 | –4.5 | 5.2 |
| Greece | 1.9 | –10.0 | 5.1 |
| Lesotho | 1.2 | –5.2 | 5.1 |
| Portugal | 2.2 | –8.0 | 5.0 |
| Slovak Republic | 2.3 | –6.2 | 5.0 |
| Israel | 3.5 | –6.3 | 5.0 |
| Nepal | 7.1 | 2.5 | 5.0 |
| Turkey | 0.9 | –5.0 | 5.0 |
| Uruguay | 0.2 | –3.0 | 5.0 |
| Qatar | 0.1 | –4.3 | 5.0 |
| Madagascar | 4.8 | 0.4 | 5.0 |
| Vanuatu | 2.9 | –3.3 | 4.9 |
| Croatia | 2.9 | –9.0 | 4.9 |
| Suriname | 2.3 | –4.9 | 4.9 |
| Italy | 0.3 | –9.1 | 4.8 |
| Luxembourg | 2.3 | –4.9 | 4.8 |
| Armenia | 7.6 | –1.5 | 4.8 |
| Morocco | 2.2 | –3.7 | 4.8 |
| United States | 2.3 | –5.9 | 4.7 |
| Mozambique | 2.2 | 2.2 | 4.7 |
| Belgium | 1.4 | –6.9 | 4.6 |
| Tanzania | 6.3 | 2.0 | 4.6 |
| France | 1.3 | –7.2 | 4.5 |
| Austria | 1.6 | –7.0 | 4.5 |
| El Salvador | 2.4 | –5.4 | 4.5 |
| Afghanistan | 3.0 | –3.0 | 4.5 |
| Argentina | –2.2 | –5.7 | 4.4 |
| Spain | 2.0 | –8.0 | 4.3 |
| Ethiopia | 9.0 | 3.2 | 4.3 |
| Uganda | 4.9 | 3.5 | 4.3 |
| Canada | 1.6 | –6.2 | 4.2 |
| Sri Lanka | 2.3 | –0.5 | 4.2 |
| Hungary | 4.9 | –3.1 | 4.2 |
| Poland | 4.1 | –4.6 | 4.2 |
| Mauritania | 5.9 | –2.0 | 4.2 |
| Burundi | 1.8 | –5.5 | 4.2 |
| Moldova | 3.6 | –3.0 | 4.1 |
| Honduras | 2.7 | –2.4 | 4.1 |
| Kazakhstan | 4.5 | –2.5 | 4.1 |
| Tunisia | 1.0 | –4.3 | 4.1 |
| Cameroon | 3.7 | –1.2 | 4.1 |
| Mali | 5.1 | 1.5 | 4.1 |
| United Kingdom | 1.4 | –6.5 | 4.0 |
| Dominican Republic | 5.1 | –1.0 | 4.0 |
| Panama | 3.0 | –2.0 | 4.0 |
| Paraguay | 0.2 | –1.0 | 4.0 |
| Central African Republic | 3.0 | 1.0 | 4.0 |
| Liberia | –2.5 | –2.5 | 4.0 |
| Sierra Leone | 5.1 | –2.3 | 4.0 |
| South Africa | 0.2 | –5.8 | 4.0 |
| Togo | 5.3 | 1.0 | 4.0 |
| Hong Kong SAR | –1.2 | –4.8 | 3.9 |
| Romania | 4.1 | –5.0 | 3.9 |
| Ecuador | 0.1 | –6.3 | 3.9 |
| Switzerland | 0.9 | –6.0 | 3.8 |
| Solomon Islands | 1.2 | –2.1 | 3.8 |
| Timor-Leste | 3.1 | –3.0 | 3.8 |
| Colombia | 3.3 | –2.4 | 3.7 |
| Jordan | 2.0 | –3.7 | 3.7 |
| Ukraine | 3.2 | –7.7 | 3.6 |
| Gabon | 3.4 | –1.2 | 3.6 |
| Taiwan Province of China | 2.7 | –4.0 | 3.5 |
| Brunei Darussalam | 3.9 | 1.3 | 3.5 |
| Tuvalu | 6.0 | –1.0 | 3.5 |
| Belarus | 1.2 | –6.0 | 3.5 |
| Bosnia and Herzegovina | 2.7 | –5.0 | 3.5 |
| Russia | 1.3 | –5.5 | 3.5 |
| Jamaica | 1.0 | –5.6 | 3.5 |
| Democratic Republic of the Congo | 4.4 | –2.2 | 3.5 |
| Korea | 2.0 | –1.2 | 3.4 |
| Dominica | 9.2 | –4.7 | 3.4 |
| Kuwait | 0.7 | –1.1 | 3.4 |
| Republic of Congo | –0.9 | –2.3 | 3.4 |
| United Arab Emirates | 1.3 | –3.5 | 3.3 |
| Marshall Islands | 2.4 | –0.2 | 3.2 |
| Namibia | –1.4 | –2.5 | 3.2 |
| South Sudan | 11.3 | 4.9 | 3.2 |
| Finland | 1.0 | –6.0 | 3.1 |
| Iran | –7.6 | –6.0 | 3.1 |
| Comoros | 1.9 | –1.2 | 3.1 |
| Netherlands | 1.8 | –7.5 | 3.0 |
| Japan | 0.7 | –5.2 | 3.0 |
| Singapore | 0.7 | –3.5 | 3.0 |
| Costa Rica | 2.1 | –3.3 | 3.0 |
| Mexico | –0.1 | –6.6 | 3.0 |
| Bahrain | 1.8 | –3.6 | 3.0 |
| Georgia | 5.1 | –4.0 | 3.0 |
| Oman | 0.5 | –2.8 | 3.0 |
| Guinea-Bissau | 4.6 | –1.5 | 3.0 |
| Norway | 1.2 | –6.3 | 2.9 |
| Bhutan | 5.3 | 2.7 | 2.9 |
| Papua New Guinea | 5.0 | –1.0 | 2.9 |
| Bolivia | 2.8 | –2.9 | 2.9 |
| Brazil | 1.1 | –5.3 | 2.9 |
| Saudi Arabia | 0.3 | –2.3 | 2.9 |
| Somalia | 2.9 | –2.5 | 2.9 |
| Egypt | 5.6 | 2.0 | 2.8 |
| Trinidad and Tobago | –0.0 | –4.5 | 2.6 |
| Angola | –1.5 | –1.4 | 2.6 |
| Malawi | 4.5 | 1.0 | 2.5 |
| Zimbabwe | –8.3 | –7.4 | 2.5 |
| Nigeria | 2.2 | –3.4 | 2.4 |
| Equatorial Guinea | –6.1 | –5.5 | 2.3 |
| Zambia | 1.5 | –3.5 | 2.3 |
| Kiribati | 2.3 | 0.0 | 2.2 |
| Pakistan | 3.3 | –1.5 | 2.0 |
| Eswatini | 1.0 | –0.9 | 1.8 |
| Puerto Rico | 2.0 | –6.0 | 1.5 |
| Micronesia | 1.2 | –0.4 | 1.4 |
| Nauru | 1.0 | –1.7 | 1.3 |
| Tonga | –0.1 | –1.2 | 1.2 |
| Haiti | –1.2 | –4.0 | 1.2 |
| Azerbaijan | 2.3 | –2.2 | 0.7 |
| Samoa | 3.5 | –3.7 | 0.5 |
| Nicaragua | –3.9 | –6.0 | 0.0 |
| Sudan | –2.5 | –7.2 | –3.0 |
| Venezuela | –35.0 | –15.0 | –5.0 |
| Lebanon | –6.5 | –12.0 | No data |
| Syria | No data | No data | No data |
Libya is forecast to have the highest growth in 2021, as well as the deepest contraction in 2020. However, the IMF notes the reliability of this data is low given Libya is currently facing a civil war and weak capacity.
Emerging and developing Asia is expected to have a strong recovery, with China and India predicted to see 2021 growth rates of 9.2% and 7.4% respectively. For China, this is a welcome change after its first quarter GDP contracted by 6.8%, the first decline since at least 1992.
The IMF predicts the U.S. will see GDP growth of 4.7% in 2021, which is slightly higher than the 4.5% average for advanced economies. Separately, the U.S. Federal Reserve also believes the economy will recover relatively quickly given the country entered the pandemic on strong economic footing.
There is every reason to believe that the economic rebound, when it comes, can be robust.
—Jerome Powell, U.S. Federal Reserve Chairman
In the meantime, the Federal Reserve says it is committed to providing financing programs and maintaining low interest rates to help boost the economy.
Spotting Opportunity
As the pandemic subsides, broad-based stimulus will be critical for economic recoveries. Clear communication on the state of the pandemic, and the decline of new infections, will also help instill consumer confidence.
Investors can consider these factors, as well as the IMF’s forecast, as they look to diversify geographically. This allows investors to take advantage of areas with the highest potential growth.
Markets in a Minute
The Average American’s Financial Portfolio by Account Type
From retirement plans to bank accounts, we show the percentage of an American’s financial portfolio that is typically held in each account.
The Average American’s Financial Portfolio by Account Type
Where does the average American put their money? From retirement plans to banks, the typical financial portfolio includes a variety of accounts.
In this graphic from Morningstar, we explore what percentage of a person’s money is typically held within each account.
Breaking Down a Typical Financial Portfolio
People put the most money in employer retirement plans, which make up nearly two-fifths of the average financial portfolio. Bank accounts, which include checking, savings, and CDs, hold the second-largest percentage of people’s money.
| Account Type | % of Financial Portfolio |
|---|---|
| Employer retirement plan | 38% |
| Bank account | 23% |
| Brokerage/investment account | 14% |
| Traditional IRA | 10% |
| Roth IRA | 7% |
| Crypto wallet/account | 4% |
| Education savings account | 3% |
| Other | 1% |
Source: Morningstar Voice of the Investor Report 2024, based on 1,261 U.S. respondents.
Outside of employer retirement plans and bank accounts, the average American keeps nearly 40% of their money in accounts that advisors typically help manage. For instance, people also hold a large portion of their assets in investment accounts and IRAs.
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Account Insight for Advisors
Given the large focus on retirement accounts in financial portfolios, advisors can clearly communicate how they will help investors achieve their retirement goals. Notably, Americans say that funding retirement accounts is a top financial goal in the next three years (39% of people), second only to reducing debt (40%).
Americans also say that building an emergency fund is one of their financial goals (35%), which can be supported by the money they hold in bank accounts. However, it can be helpful for advisors to educate clients on the lower return potential of savings accounts and CDs. In comparison, advisors can highlight that investment or retirement accounts can hold assets with more potential for building wealth, like mutual funds or ETFs. With this knowledge in mind, clients will be better able to balance short-term and long-term financial goals.
The survey results also highlight the importance of advisors staying up to date on emerging trends and products. People hold 4% of their money in crypto accounts on average, and nearly a quarter of people said they hold crypto assets like bitcoin. Advisors who educate themselves on these assets can more effectively answer investors’ questions.
Markets in a Minute
5 Factors Linked to Higher Investor Engagement
Engaged investors review their goals often and are more involved in decisions, but which factors are tied to higher investor engagement?
5 Factors Linked to Higher Investor Engagement
Imagine two investors. One investor reviews their investment goals every quarter and actively makes decisions. The second investor hasn’t reviewed their goals in over a year and doesn’t take part in any investment decisions. Are there traits that the first, more involved investor would be more likely to have?
In this graphic from Morningstar, we explore five factors that are associated with high investor engagement.
Influences on Investor Engagement
Morningstar scores their Investor Engagement Index from a low of zero to a high of 100, which indicates full engagement. In their survey, they discovered five traits that are tied to higher average engagement levels among investors.
| Factor | Investor Engagement Index Score (Max = 100) |
|---|---|
| Financial advisor relationship | Don’t work with financial advisor: 63 |
| Work with financial advisor: 70 | |
| Sustainability alignment | No actions/alignment: 63 |
| Some/full alignment: 74 | |
| Trust in AI | Low trust: 61 |
| High trust: 74 | |
| Risk tolerance | Conservative: 62 |
| Aggressive: 76 | |
| Comfort making investment decisions | Low comfort: 42 |
| High comfort: 76 |
Morningstar’s Investor Engagement Index is equally weighted based on retail investors’ responses to seven questions: feeling informed about composition and performance of investments, frequency of investment portfolio review, involvement in investment decision-making, understanding of investment concepts and financial markets, frequency of goals review, clarity of investment strategy aligning to long-term goals, and frequency of engagement in financial education activities.
On average, people who work with financial advisors, have sustainability alignment, trust AI, and have a high risk tolerance are more engaged.
The starkest contrast was that people with high comfort making investment decisions have engagement levels that are nearly two times higher than those with low comfort. In fact, people with a high comfort level were significantly more likely to say they were knowledgeable about the composition and performance of their investments (84%) vs. those with low comfort (18%).
Personalizing Experiences Based on Engagement
Advisors can consider adjusting their approach depending on an investor’s engagement level. For example, if a client has an aggressive risk tolerance this may indicate the client is more engaged. Based on this, the advisor could check if the client would prefer more frequent portfolio reviews.
On the other hand, soft skills can play a key role for those who are less engaged. People with low comfort making investment decisions indicated that the top ways their financial advisor provides value is through optimizing for growth and risk management (62%), making them feel more secure about their financial future (38%), and offering peace of mind and relief from the stress of money management (30%).
The Average American’s Financial Portfolio by Account Type
5 Factors Linked to Higher Investor Engagement
The Top 5 Reasons Clients Fire a Financial Advisor
The Top 5 Reasons Clients Hire a Financial Advisor
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