FOR several times now, the financial markets have been ready for the day that many are hoping for, which is putting the pandemic behind us. This has caused a few disappointments and been manifested as smaller selloffs in the stock markets. In my interpretation, especially concerning the negative reaction to the emergence of the Omicron variant, the disappointment was mainly about the expected macroeconomic growth suffering another setback. That is my assessment, but I argue that it has been possible to observe it several times in 2021. Therefore, I have been arguing for some time that classic gross domestic product (GDP) growth will have a bigger importance for the stock market over the next 18 months and it will weigh more than it has been for an even longer period.
I think the global economy is doing fairly well. However, the crisis has generated a huge government debt pile in several countries. This will be a problem at some point, but probably not until five to seven years from now. I justify the comfortable attitude of the world economy with the reasonable resilience that the global economy has shown throughout the crisis, therefore, I am not fundamentally concerned about the economic outlook. The same goes for the health of the financial markets, in which I have good confidence in, overall. But the prospect of global growth itself, which is one of several important factors if investors are to remain in a good mood, is more critical in my view.
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