Most CFA Institute members predict K-shaped recovery from Covid-19 pandemic: Survey

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A significant percentage of CFA Institute members believe that a “K-shaped” economic recovery is forming, where different parts of the economy are recovering from the Covid-19 pandemic at different rates, times, or magnitudes, as per a survey. According to the survey of 6,040 global respondents by CFA Institute, the global association of investment professionals, 44% predicted a K-shape recovery, indicating a globally divergent recovery.

The K-shaped recovery marks a distinct shift away from the “hockey-stick shaped” recovery predicted last year, when close to 75% of respondents thought that any upturn would be slow or stagnant in the short term, before picking up in the medium term, the survey said.

“The post-pandemic world is quite visibly a volatile one, and everyone is eyeing the nature of our economic recovery from the same. I believe the most predictable bounce-back would be of a K-shaped nature, wherein different parts of the economy would recover at different rates.

“It is, of course, a certainty that Covid-19 is bound to affect all walks of life and will influence Government policies, Tax regulations, and the entire Indian financial landscape,” said Vidhu Shekhar, CFA, CIPM, Country Head, India, CFA Institute.

Survey results

The survey was fielded to the global membership of CFA Institute across all regions and jurisdictions where the organisation has the representation. The survey was conducted from March 8 – March 28, 2021, when the effects of the second wave in India had not yet been felt.

In India, 42% of respondents believe that a ‘K-shape’ economic recovery is forming, where different parts of the economy are recovering at different rates, times, or magnitudes.

Around 37% of members believe that the economy is on a steady path towards fully recovering and operating at a pre-pandemic pace, while 11% believe that a ‘W-shape’ economic recovery is forming, whereby the economy will see-saw after an initial strong rebound.

The survey further said that 52% of Indian respondents believe that equity markets have recovered too quickly on the impulse of monetary stimulus; they are now out of pace with the real economy and a correction is to be expected within the next 1-3 years.

Globally, China’s recovery is considered to be ahead of most markets; respondents in that country report more optimism for a full recovery in one to three years (39%).

In general, emerging economies appear to be less optimistic about economic recovery. Only 23%, 25%, and 27% of respondents in Latin America and the Caribbean, the Middle East, and Africa, respectively, believe their economy is already on a steady path to recovery.