Aviva Investors expects solid recovery but some growing pains

Aviva Investors, the global asset management arm of Aviva PLC, continues to expect a robust global recovery in the rest of 2021 and throughout next year, although growth is expected to slow sequentially. Moreover, risks to growth are now judged to be balanced, largely because of downside concerns in China and some re-opening frictions. Global growth should reach 6.5% this year and 4.5% next.

house view

Inflation has risen more rapidly than expected, partly because of factors such as energy prices, but partly because supply has struggled to keep up with rapidly reviving demand. Much of this is expected to be transitory, a view shared by most developed market central banks. As a result, they are not expected to raise policy rates for some time. Compared to three months ago, upside inflation risks are slightly higher, but it is still projected to fall back in 2022.

The higher that inflation peaks and the longer it persists, the greater the danger that it becomes more entrenched in the minds of business, households and governments. If it were to feed more meaningfully into the labour market in the form of higher wage demands, then monetary authorities might have to respond more aggressively. As COVID worries subside, fiscal support will fall away automatically, but fiscal policy is not expected to be tightened significantly in most places.

Michael Grady, head of investment strategy and chief economist at Aviva Investors, said:

“Our constructive outlook for growth means that our asset allocation remains broadly pro-risk and we continue to be modestly overweight global equities. However, we have scaled back that position marginally because of growing pains which could impact sales and margins.

“We have also tilted to a mix of more defensive sector exposures such as healthcare in addition to existing cyclical sectors such as energy and industrials.

“We also remain modestly underweight duration, but have also scaled back that position because of the more balanced distribution of risks regarding global growth. Comparatively tight spreads mean that we continue to see corporate credit as less attractive than equities.”

For more information contact:

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Laura Cocker

Media Relations Manager

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Victoria Howley

Media Relations Manager

Important information

The information and opinions contained in this document are for use by the financial press and media only. No reliance may be placed for any purpose on the information or opinions contained in this document nor should they be seen as advice. 

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Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (“Aviva Investors”) as at 11 April 2022. Unless stated otherwise any views and opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. 

Issued by Aviva Investors Global Services Limited, registered in England No. 1151805. Registered Office: St Helen's, 1 Undershaft, London, EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority.

Aviva Investors

Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 14 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £268 billion in assets under management as at 31 December 2021.

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Aviva Investors Global Services Limited
St Helen's, 1 Undershaft, London, EC3P 3DQ

Phone     +44 (0)20 7809 6000

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Issued by Aviva Investors Global Services Limited, registered in England No. 1151805. 
Registered Office: St Helen's, 1 Undershaft, London, EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority and a member of the Investment Association.

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