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When it comes to Covid-19, the situation continues to evolve and we have now entered a new phase, which requires us to review the current situation from a high-level perspective. We think that currently the spread and control of the virus, as well as the policy response are marked by a fundamental shift towardsÌýherd-immunityÌýstrategies and theÌýeasing of social restrictions.ÌýIn this phase, the management of the transition from aÌýpandemicÌýto anÌýendemic situationÌýbecomes crucial and countries that have been runningÌýzero Covid-19 strategiesÌýmight have to review their re-opening strategies while considering new highly-infectious variants. The varyingÌýeffectiveness ofÌýdifferent vaccinesÌýmight also become more visible going forward, and it will be necessary to monitor theÌýsocial consensusÌýthat will form around levels of casualties that are acceptable before new restrictions might be imposed.
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In the light of this as well as due to recent developments in the global economy, ÃÛ¶¹ÊÓƵ Asset Management has also updated itsÌý5-year Capital Market AssumptionsÌýframework that covers a wide range of asset classes. Global Sovereign Markets - Strategy & Advice has once again calculated the 5-year expected returns for a number ofÌýsovereign sample portfoliosÌýwhich we think are representative of the investment behavior of central banks and long-term sovereign saving funds. We now consider the possibility of aÌýHigh Growth and Inflation scenarioÌýwhere the massive shift toward a digital economy that occurred during the pandemic would lead to a period of strong growth rates. With still ample stimulus in the system, inflation would rise faster than expected, amplified by labor shortages and supply chain bottlenecks.