Prospects for world economic growth have been overwhelmed by the massive and unprecedented disruption caused by the coronavirus pandemic. Nevertheless much has changed since the original devastation caused by Covid in the first half of the year. Medical management of the illness is more effective, and economies have made considerable strides in adapting to the new environment. Global supply chains have been preserved and industrial production has recovered. Moreover, widespread vaccination programmes should reinforce confidence and provide hope of a more positive 2021.

China’s relative success in suppressing the impact of the virus has resulted in a sustained recovery with growth of 2% forecast for the past year, boosted by both domestic and global demand. India, by contrast, has fallen into recession after three consecutive quarters of GDP contractions, but there are signs of a tentative recovery following some easing of restrictions and a good monsoon. Brazil, too, may be past the worst of its economic pain, so long as the spread of the disease can begin to be contained.

In the long term, emerging markets still have the potential to grow much faster than their developed peers. They may also be favoured by demographics as their younger populations should be better placed to withstand the pandemic, even where social security systems and access to quality healthcare are relatively weak. At the time of writing, there is still considerable uncertainty about the extent of lasting disruption from the virus and the effectiveness of the different health responses being implemented. However, local economic cycles in individual countries have always varied widely, and the portfolio continues to focus on sound businesses with strong market positions, particularly those that will benefit from increased wealth in the middle classes.