The response from policymakers to the coronavirus pandemic has been so successful in keeping the global economy in check, according to ANZ Chief Economist Richard Yetsenga, it has separated macroeconomic movements from traditional consequences.
That’s good news for markets, which have held up surprisingly well after significant volatility in the early parts of the crisis, he said.
“It doesn't mean we don't have economic challenges,” Yetsenga said. “But I think it does mean when you look at equity and credit markets, they’re not completely crazy.”
Speaking as part of the ‘Asia’s Economy: taking centre stage’ virtual event hosted by ANZ, which also featured Eurasia Group & GZERO Media President & Founder Ian Bremmer, Yetsenga said numbers from the US in recent months which traditionally signalled double-digit mortgage defaults have instead barely moved the dial.
“The policy response has been so powerful that it's effectively broken the link between our macro signals and what actually happens in terms of defaults,” he said.
“I think what markets have done ultimately is sustainable in a pure economic sense.”
Throughout the global financial crisis, a long period of numbers related to economic performance surprised on the downside. During the pandemic, numbers have been consistently in line with expectations, Yetsenga said.
“In other words, we have this downturn's measure, at least at this point,” he said.