Business & Investment

After a slow start to 2021, the global economy should overcome the competition

The outlook for the global economy in 2021 depends on the same that has dominated 2020. Pandemic.

The fundamental difference, of course, is that this year’s pandemic was a surprise, but next year we’ll have a known amount of tools to beat.

Successful vaccination programs in some countries earlier this year, and other parts of the world since spring, will change the health of people around the world and their economies.

Significant reductions in outbreaks in many developed countries should have been made by the end of the first quarter of this year if vaccine deployments were rapid and targeted.

The fight against the SARS-CoV-2 virus dominated 2020 and continues until 2021.

This could lead to a full resumption of some major economies around March, stagnating a lot of demand and investment.

Monetary easing will continue to involve fiscal stimulus, putting enough fuel into recovery tanks.

Many individuals and businesses are raking in money, and as expected, they carry a large amount of cash that could be spent in 2021 if trust regains after a pandemic.

For example, the UK’s household savings rate has more than doubled from the historical average of 8% to 17%.

In the medium term, this is very positive for the economy. That means people have the money to live in times of difficulty and, if successful, can get more cash.

In the bounce scenario, the big issue to watch out for is rising inflation.

Central banks in the United States, Great Britain and the EU have sent out large amounts of cash to keep the economy on the water during a pandemic.

It is estimated that 20 percent of the dollars that existed so far were generated in 2020, thanks to the $ 3.8 trillion in quantitative easing. Amazing statistics.

The Bank of England has added £ 440 billion to QE since the onset of the coronavirus crisis. That’s more than half of £ 875 billion in total.

Overall, the Federal Reserve, the Bank of Japan, the Bank of Japan, and the European Central Bank have printed about $ 5.6 trillion in response to the pandemic and the resulting economic downturn, but they are not yet complete.

The economy is full of newly created liquidity, which will still be filtered through the system in 2021.

QE has been significantly enhanced in the UK this year, as the Bank of England chart shows.

QE has been significantly enhanced in the UK this year, as the Bank of England chart shows.

This leads to a surge in asset prices, as evidenced by the dramatic rise in the stock market, but it also carries serious risks.

A strong recovery after spring could push the economy up at an unpleasant rate and force rate hikes.

If it is properly managed, the expected surge in inflation is size-limited, short-lived, and can dissipate without much harm.

However, if it is more dramatic and protracted than expected, this can cause problems for the global economy, as debt rates will rise significantly and are too much for many individuals and businesses to handle.

The Federal Reserve unleashed a vast wave of quantitative easing to strengthen the U.S. economy in 2020

The Federal Reserve unleashed a vast wave of quantitative easing to strengthen the U.S. economy in 2020

Monetary policy makers around the world need to carefully monitor and consider the data very carefully.

Looking specifically at the outlook here in the UK, two key question marks of the economy should be largely resolved in the first quarter of 2021.

In fact, one of these could be resolved before the first day of the year begins.

The future relationship between the UK and the EU must be determined by the 2021 chime or a few days in advance.

At the time of writing on December 23, it is not yet clear if a free trade agreement will be signed, but it seems very likely that a compromise will be found.

There is a legendary “certainty” that companies crave, knowing that they must follow the rules and tariff framework of the World Trade Organization when selling to EU customers, even without a deal.

The final line of the four-year Brexit process is finally here.

The final line of the four-year Brexit process is finally here.

It is worth remembering that exports of goods to the EU account for only 8% of the UK economy.

The second important issue is the same issue facing all countries. Work on Covid.

Encouragingly, Britain is the tip of the spear in the battle for vaccines. The UK has already injected more than 500,000 people since it became the first country to approve properly scrutinized jabs.

Although not the first vaccine to be cleared, the UK has developed the most useful vaccine given the low cost and easy storage of Oxford University-AstraZeneca products.

If the program can be increased to millions a week, as planned, vulnerable people will be largely protected by March and the UK economy will be fully open ahead of most other countries. ..

It’s too late to avoid a second fall into the territory of the recession, but like the first drop in the double, the recession will end in the very next quarter.

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After a slow start to 2021, the global economy should overcome the competition

https://www.dailymail.co.uk/money/markets/article-9082515/After-slow-start-2021-global-economy-races.html?ns_mchannel=rss&ns_campaign=1490&ito=1490 After a slow start to 2021, the global economy should overcome the competition

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