It is not surprising that earlier this month the Reserve Bank of New Zealand has provided further monetary policy support to help with what is likely to be an extended period of post-COVID-19 recovery

Here the virus remains well-contained, but overseas there has been a resurgence in cases across a wide range of countries. However, the latest analysis is that the global economy will still recover in 2021.

as demonstrated by the impact of the recent cluster of new cases in Auckland and the resultant business restrictions. At the moment, the consensus view is that both the global and local economies will gradually pull out of the COVID-19-induced recession, but it will be a long and slow haul, with ongoing risk of relapse. Given the ongoing uncertainty, extensive diversification and other defensive portfolio insurance will be central to good outcomes.

Besides the local outbreak in Auckland, the daily number of global new cases continues to increase. At the moment, the consensus view among forecasters remains that 2021 will see a recovery in both the global and domestic economies, which could see the sectors previously most affected by COVID-19 lockdowns regain some lost ground, but risks remain tilted to the downside. Portfolio protection through extensive diversification and more defensive sectoral choices will have to remain a priority.

It is still not clear how the global economy will play out. There are signs that the worst has passed, and that fiscal and monetary policy almost everywhere is strongly supportive.. However, even if COVID-19 is contained--a big if given recent experience in the U.S. and elsewhere--further progress is more likely to be gradual and possibly interrupted by new outbreaks, rather than a quick V-shaped recovery.