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Mackenzie Investments Forecasts Economic Recalibration in 2022 Mid-Year Outlook Report

Mackenzie Investments Forecasts Economic Recalibration in 2022 Mid-Year Outlook Report
Canada NewsWire
TORONTO, June 15, 2022

Decades-high inflation underpinned by war in Ukraine and enduring COVID policiesChina will look to favour growth as COVID …

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Mackenzie Investments Forecasts Economic Recalibration in 2022 Mid-Year Outlook Report

Canada NewsWire

  • Decades-high inflation underpinned by war in Ukraine and enduring COVID policies
  • China will look to favour growth as COVID policies create ongoing waves
  • Central banks may tolerate slow growth in fight to tame inflation

TORONTO, June 15, 2022 /CNW/ - Mackenzie Investments ("Mackenzie") today released its 2022 Mid-Year Outlook. The report offers insights for investors and financial advisors on trends that have shaped Canadian and global markets so far in 2022 and that are expected to continue to do so through the second half of the year.

With the war in Ukraine disrupting commodity markets and COVID-19 continuing to apply pressure on supply chains, the report noted that growth was slower than anticipated early in the first half of the year as central banks began the process of strategically raising interest rates in an effort to fight inflation.  

"We began the year with a cautious optimism while understanding that there was still a long road ahead for the global economic recovery in the wake of the pandemic," said Lesley Marks, CIO of Equities, Mackenzie Investments. "As much of the world has tried to resume some sense of normalcy, global conflicts, persisting COVID-19 measures and the anticipation of higher interest rates have continued to apply pressure to supply chains around the world, resulting in high inflation and volatility in equity and bond markets."

The report identified three key themes that have dominated capital markets in the first half of the year and are expected to continue to do so through 2022:

Recalibrating for an economy with higher inflation

Inflation was stronger than expected during the first half of the year, with the war in Ukraine playing a significant role, causing lasting supply chain impacts for many commodities. Sanctions on Russia, curtailed energy exports from Russia to Europe and major interruption on the supply of globally important exporting regions, together with COVID-19 policies continuing to affect supply chains, have all contributed to sustained elevated pricing.

Borrowing costs have climbed in response to anticipated rate hikes from the Federal Reserve, and wage gains have failed to keep pace with inflation.

Increasingly, central banks will continue to take aim at inflation with tightening monetary policy, while trying to avoid the possibility of stagflation in the year ahead. Mackenzie believes that, while inflation has been hard on growth-oriented markets, rising commodity prices could provide a boost to producer-oriented countries, such as Canada, supporting relative outperformance in Canadian equities.

China facing persistent headwinds

While Mackenzie expected that China would see renewed growth in 2022, COVID-19 continues to represent a significant headwind. As China's 'dynamic zero COVID policy' has resulted in more lockdowns in economic hubs, ripple effects are being felt in already strained global supply chains, which link China to many of the world's economies.

China remains committed to supporting a lofty 5.5 per cent growth target with supportive monetary and fiscal policies but substantial COVID policies will continue to pose a challenging economic climate, and a misstep by the country could reverberate globally.

The report notes that a stable, sustainable growth path for China will be beneficial for the world, and that the slowdown in Chinese GDP growth will bottom this year, leaving China in a position to provide a positive boost to global growth.

Central banks turn aggressive against inflation

Central banks, including the Bank of Canada and the Federal Reserve, were slow to raise rates as they viewed inflation as transitory. With lasting pressures, central banks will prioritize taming inflation over economic growth for the remainder of 2022.

Mackenzie believes that tighter financial conditions and hawkish central banks will likely result in a choppy investment environment in the second half of the year as the market redirects its focus away from inflation and towards slower growth. As central banks play catchup in the fight against inflation, investors may be underestimating how high policy rates may rise.

"What we're seeing is an intricately connected global economy experiencing sustained inflationary pressures from major events," concluded Steven Locke, CIO of Fixed Income and Multi-Asset, Mackenzie Investments.  "Fortunately, strength in the North American economies and labour markets somewhat insulates us from the direct economic shocks resulting from the war in Ukraine, leaving Canada with a greater potential to avoid recession – but leaving our central bank in the delicate position of balancing higher interest rates and slower growth."

To learn more about Mackenzie Investments and its 2022 Mid-Year Outlook, visit: https://www.mackenzieinvestments.com/content/dam/mackenzie/en/mutual-funds/mi-blue-book-mid-year-en.pdf

About Mackenzie Investments

Mackenzie Investments is a leading investment management firm with $195.7 billion in assets under management as of May 31, 2022. Mackenzie provides investment solutions and related services to more than one million retail and institutional clients through multiple distribution channels. Founded in 1967, Mackenzie is a global asset manager with offices across Canada as well as in Boston, Dublin, London, Hong Kong and Beijing. Mackenzie is a member of IGM Financial Inc. (TSX: IGM), one of Canada's premier financial services companies. For more information, visit mackenzieinvestments.com.

SOURCE Mackenzie Investments

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Economics

One Year Ahead Inflation Expectations for July (and Forward 2-3 Year) Drop

The NY Fed measure of inflation expectations dropped dramatically from 6.8% in June to 6.2% in July. This is a much larger drop than the Michigan series…

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The NY Fed measure of inflation expectations dropped dramatically from 6.8% in June to 6.2% in July. This is a much larger drop than the Michigan series (0.1ppt).

Figure 1: CPI inflation year-on-year (black), median expected from Survey of Professional Forecasters (blue +), median expected from Michigan Survey of Consumers (red), median from NY Fed Survey of Consumer Expectations (light green), forecast from Cleveland Fed (pink), mean from Coibion-Gorodnichenko firm expectations survey [light blue squares]. Michigan July observation is preliminary. Source: BLS, University of Michigan via FRED and iPhiladelphia Fed Survey of Professional ForecastersNY FedCleveland Fed and Coibion and Gorodnichenko

Not only did the median one year expected drop, so too did the implied 12 month inflation rates for 2-3 years out.

Figure 2: One year median from NY Fed Survey of Consumer Expectations as of indicated date (blue ), implied 12 month growth rates for 2-3 years out (tan). Source: NY Fed, and author’s calculations.

Notice that the longer term expected rate 2-3 years out is back to (and less) than where it was pre-pandemic. This is consistent with the five year inflation breakevens (unadjusted and adjusted) reported in yesterday’s post.

Figure 3:  Five year inflation breakeven calculated as five year Treasury yield minus five year TIPS yield (blue, left scale), five year breakeven adjusted by inflation risk premium and liquidity premium per DKW (red, left scale), both in %. Light blue dashed line at 2.5% CPI inflation, consistent with 2% PCE inflation. NBER defined recession dates shaded gray. Source: FRB via FRED, Treasury, NBER, KWW following D’amico, Kim and Wei (DKW) accessed 8/4, and author’s calculations.

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Sex work is real work: Global COVID-19 recovery needs to include sex workers

Societally, we need to recognize that sex workers have agency and deserve the same respect, dignity and aid as any other person selling their labour.

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Globally, sex workers have been left to fend for themselves during the pandemic with little to no support from the government. (AP Photo/Bikas Das)

During the pandemic, business shifted from in person to work-from-home, which quickly became the new normal. However, it left many workers high and dry, especially those with less “socially acceptable” occupations.

The pandemic has adversely impacted sex workers globally and substantially increased the precariousness of their profession. And public health measures put in place made it almost impossible for sex workers to provide any in-person service.

Although many people depend on sex work for survival, its criminalization and policing stigmatizes sex workers.

Research shows that globally, sex workers have been left behind and in most cases excluded from government economic support initiatives and social policies. There needs to be an intersectional approach to global COVID-19 recovery that considers everyone’s lived realities. We propose policy recommendations that treat sex work as decent work and that centre around the lived experiences and rights of those in the profession.

Sex work and the pandemic

The United Nations Population Fund (UNFPA) recently reported that apart from income-loss, the pandemic has increased pre-existing inequalities for sex workers.

In a survey conducted in Eastern and Southern Africa, the UNFPA found that during the pandemic, 49 per cent of sex workers experienced police violence (including sexual violence) while 36 per cent reported arbitrary arrests. The same survey reported that more than 50 per cent of respondents experienced food and housing crises.

Lockdowns and border closures adversely impacted Thailand’s tourism industry which relies partially on the labour of sex workers.


Read more: Sex workers are criminalized and left without government support during the coronavirus pandemic


In the Asia Pacific, sex workers reported having limited access to contraceptives and lubricants along with reduced access to harm reduction resources. Lockdowns also disrupted STI or HIV testing services, limiting sex workers’ access to necessary healthcare.

In North America, sex workers have been excluded from the government’s recovery response. And many began offering online services to sustain themselves.

A woman stands backlit next to a dimly lit bus that reads 'Thailand' with green lighting.
Sex workers stand in a largely shut-down red light area in Bangkok, Thailand on March 26, 2020. (AP Photo/Gemunu Amarasinghe)

Government vs. community response

Globally, sex workers have been left to fend for themselves during the pandemic with little to no support from the government. But communities themselves have been rallying.

Elene Lam, founder of Butterfly, an Asian migrant sex organization in Canada, talks about the resilience of sex wokers during the pandemic.

She says organizations like the Canadian Alliance for Sex Work Law Reform are working in collaboration with Amnesty International to mobilize income support and resources to help sex workers in Canada.

Organizations in the United Kingdom, Germany, India and Spain have also set up emergency support funds. And some sex worker organizations have developed community-specific resources for providing services both in person and online during the pandemic.

Global recovery needs to include sex workers

The International Labour Organization’s “Decent Work Agenda” emphasizes productive employment and decent working conditions as being the driving force behind poverty reduction.

Sociologist Cecilia Benoit explains that sex work often becomes a “livelihood strategy” in the face of income and employment instability. She says that like other personal service workers, sex workers also should be able to practice without any interference or violence.

In order to have an inclusive COVID-19 recovery for all, governments need to work to extend social guarantees to sex workers — so far they haven’t.

As pandemic restrictions disappear, it is crucial to ensure that everyone involved in sex work is protected under the law and has access to accountability measures.

A woman stands wearing a mask with a safety vest on in front of a collage of scantily clad women and a sign that reads 'nude women non stop'
A volunteer helps out at Zanzibar strip club during a low-barrier vaccination clinic for sex workers in Toronto in June 2021. THE CANADIAN PRESS/Frank Gunn

Recommendations

As feminist researchers, we propose that sex work be brought under the broader agenda of decent work so that the people offering services are protected.

  1. Governments need to have a legal mandate for preventing sexual exploitation.

  2. Law enforcement staff need to be trained in better responding to the needs of sex workers. To intervene in and address situations of abuse or violence is critical to ensure workplace safety and harm reduction.

  3. Awareness and educational campaigns need to focus on destigmatizing sex work.

  4. Policy-makers need to incorporate intersectionality as a working principle in identifying and responding to the different axes of oppression and marginalization impacting LGBTQ+ and racialized sex workers.

  5. Engagement with sex workers and human rights organizations need to happen when designing aid support to ensure that an inclusive pathway for recovery is created.

  6. Globally, there needs to be a steady commitment towards destigmatizing sex workers and their services.

Despite the gradual waning of pandemic restrictions, sex workers continue to face the dual insecurity of social discrimination and loss of income support. Many are still finding it difficult to stay afloat and sustain themselves.

Societally, we need to recognize that sex workers have agency and deserve the same respect, dignity and aid as any other person selling their labour.

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

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Government

OU researchers award two NSF pandemic prediction and prevention projects

Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its…

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Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its Predictive Intelligence for Pandemic Prevention initiative, which focuses on fundamental research and capabilities needed to tackle grand challenges in infectious disease pandemics through prediction and prevention.

Credit: Photo provided by the University of Oklahoma.

Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its Predictive Intelligence for Pandemic Prevention initiative, which focuses on fundamental research and capabilities needed to tackle grand challenges in infectious disease pandemics through prediction and prevention.

To date, researchers from 20 institutions nationwide were selected to receive an NSF PIPP Award. OU is the only university to receive two grants to the same institution.

“The next pandemic isn’t a question of ‘if,’ but ‘when,’” said OU Vice President for Research and Partnerships Tomás Díaz de la Rubia. “Research at the University of Oklahoma is going to help society be better prepared and responsive to future health challenges.”

Next-Generation Surveillance

David Ebert, Ph.D., professor of computer science and electrical and computer engineering in the Gallogly College of Engineering, is the principal investigator on one of the projects, which explores new ways of sharing, integrating and analyzing data using new and traditional data sources. Ebert is also the director of the Data Institute for Societal Challenges at OU, which applies OU expertise in data science, artificial intelligence, machine learning and data-enabled research to solving societal challenges.

While emerging pathogens can circulate among wild or domestic animals before crossing over to humans, the delayed response to the COVID-19 pandemic has highlighted the need for new early detection methods, more effective data management, and integration and information sharing between officials in both public and animal health.

Ebert’s team, composed of experts in data science, computer engineering, public health, veterinary sciences, microbiology and other areas, will look to examine data from multiple sources, such as veterinarians, agriculture, wastewater, health departments, and outpatient and inpatient clinics, to potentially build algorithms to detect the spread of signals from one source to another. The team will develop a comprehensive animal and public health surveillance, planning and response roadmap that can be tailored to the unique needs of communities.

“Integrating and developing new sources of data with existing data sources combined with new tools for detection, localization and response planning using a One Health approach could enable local and state public health partners to respond more quickly and effectively to reduce illness and death,” Ebert said. “This planning grant will develop proof-of-concept techniques and systems in partnership with local, state and regional public health officials and create a multistate partner network and design for a center to prevent the next pandemic.”

The Centers for Disease Control and Prevention describes One Health as an approach that bridges the interconnections between people, animals, plants and their shared environment to achieve optimal health outcomes.

Co-principal investigators on the project include Michael Wimberly, Ph.D., professor in the College of Atmospheric and Geographic Sciences; Jason Vogel, Ph.D., director of the Oklahoma Water Survey and professor in the Gallogly College of Engineering School of Civil Engineering and Environmental Science; Thirumalai Venkatesan, director of the Center for Quantum Research and Technology in the Dodge Family College of Arts and Sciences; and Aaron Wendelboe, Ph.D., professor in the Hudson College of Public Health at the OU Health Sciences Center.

Predicting and Preventing the Next Avian Influenza Pandemic

Several countries have experienced deadly outbreaks of avian influenza, commonly known as bird flu, that have resulted in the loss of billions of poultry, thousands of wild waterfowl and hundreds of humans. Researchers at the University of Oklahoma are taking a unique approach to predicting and preventing the next avian influenza pandemic.

Xiangming Xiao, Ph.D., professor in the Department of Microbiology and Plant Biology and director of the Center for Earth Observation and Modeling in the Dodge Family College of Arts and Sciences, is leading a project to assemble a multi-institutional team that will explore pathways for establishing an International Center for Avian Influenza Pandemic Prediction and Prevention.

The goal of the project is to incorporate and understand the status and major challenges of data, models and decision support tools for preventing pandemics. Researchers hope to identify future possible research and pathways that will help to strengthen and improve the capability and capacity to predict and prevent avian influenza pandemics.

“This grant is a milestone in our long-term effort for interdisciplinary and convergent research in the areas of One Health (human-animal-environment health) and big data science,” Xiao said. “This is an international project with geographical coverage from North America, Europe and Asia; thus, it will enable OU faculty and students to develop greater ability, capability, capacity and leaderships in prediction and prevention of global avian influenza pandemic.”

Other researchers on Xiao’s project include co-principal investigators A. Townsend Peterson, Ph.D., professor at the University of Kansas; Diann Prosser, Ph.D., research wildlife ecologist for the U.S. Geological Survey; and Richard Webby, Ph.D., director of the World Health Organization Collaborating Centre for Studies on the Ecology of Influenza in Animals and Birds with St. Jude Children’s Research Hospital. Wayne Marcus Getz, professor at the University of California, Berkeley, is also assisting on the project.

The National Science Foundation grant for Ebert’s research is set to end Jan. 31, 2024, while Xiao’s grant will end Dec. 31, 2023.


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