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Western Asset's Global Outlook, Q2 2020

Executive Summary

  • Western Asset’s base case outlook is for a longer, U-shaped global economic recovery. This is premised on the view that near-term growth will be severely impacted, but that this shortfall will prove to be largely transitory as policymakers push to resuscitate economic activity.

  • Possible declines in US GDP growth could be much more severe than even what was observed during the late stages of the global financial crisis. However, we believe that the economic bounce-back can be strong and relatively quick.

  • We currently expect the eurozone to contract by around 6% this year, but the contraction will become more pronounced with every week that restrictive measures are necessary to contain the viral outbreak.

  • The heterogeneity of Asian economies will continue to reflect the divergence in growth between economies more closely linked to China’s consumption and the Asian tech supply chain, as well as those that are more endogenously driven.

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