“Corona”, this new virus that first appeared in the Chinese metropolis of Wuhan, kept the world in suspense throughout 2020. In this respect, it is almost pointless to compare the economic development this year with the forecasts we made in November 2019. Global economic output will drop by more than four percent this year compared to 2019. The fact that the minus is not even greater is due solely to China, the only “big” economy that will grow this year (with an expected plus of 2.2 percent). The USA
(-3.5 percent), Germany (-5.1 percent) and the entire euro zone (-7.5 percent), on the other hand, were hit hard by the economic restrictions adopted, as were almost all emerging countries. A sharp rise in unemployment and indebtedness – both for governments and companies – are just two of many indicators that illustrate the extent of the economic crisis in 2020.
Nevertheless: improvement is in sight! This year, two vaccines were approved in the USA and one in Europe, which will then be gradually produced, distributed and administered. A number of companies have made great and unusually rapid advances in their research and are also in the starting blocks so that widespread medical care with vaccines is possible over the coming year. 2021 will therefore be a year of economic upswing, which will also be very strong. We expect the global economy to grow by 5.8 percent.
But before the global economy can recover from the corona shock in the coming months, there are still a few hurdles to overcome. New infections in the northern hemisphere recently rose sharply in the course of autumn and the beginning of winter. This has led to new contact restrictions being enacted in both Europe and the USA, which will have a negative impact on economic development in the coming months. As a result, the economic dynamism in the industrialized countries will be quite subdued in the fourth quarter of 2020 and also at the beginning of 2021. But with the beginning of spring and the vaccines that are then likely to be available in larger quantities, the tide should turn for the better and an economic boom begin.
2021 will therefore be the year of the “V”: 1. A dynamic and self-reinforcing economic upswing, in which the economic damage that was caused in 2020 will be completely or at least almost made up in most countries and thus actually “V” -shaped. 2. This will be triggered by a lot of monetary and fiscal policy tailwind, which will continue in 2021. 3. He is supported by several vaccines (“V” accines), which will hopefully help to defeat the coronavirus (“V” ictory!).
Next year there will be a synchronous upswing in the industrialized and emerging countries. With the exception of China in 2020, the latter suffered particularly badly economically. Among other things, this was due to the fact that countries such as India, South Africa, Mexico and Brazil have not managed to effectively prevent the spread of Covid-19 for a long time. India, for example, recorded a projected decline in real economic activity of 75 percent in the second quarter of 2020. In the meantime, however, the infection rate has calmed down in almost all emerging countries, so that economic restrictions have been relaxed or lifted. This is already being reflected in a significant recovery in many economic data.
Dynamism in the Far East
In Asia in particular, the most important macroeconomic indicators are now again above the pre-Corona level and also above the level of the previous year. Countries like Vietnam or Taiwan will grow slightly in 2020. This is because most of the Asian countries have been very successful in containing the pandemic. In addition, there is the persistently high demand for goods from the western industrialized countries and the geographical proximity to China, whose rapid economic recovery has had a positive effect on the Asian trading partners. In Eastern Europe and Latin America, however, the economic catch-up process is slower.
China is a guarantee for positive economic development in the coming year as well. With new infections of around 50 people every day, economic life has almost completely normalized in recent months. It is almost an irony of fate that China has emerged stronger from the corona crisis and has shortened the economic gap to the US faster than it would otherwise have been the case. Chinese industrial production has grown strongly since the summer and has thus become the engine of the economic recovery. The positive development of the purchasing manager indices shows that this trend will continue. In addition, domestic demand still has some catching up to do. Retail sales are only five percent above the previous year’s level, while it was a good eight percent before the crisis. We are therefore expecting economic growth of 9.5 percent for 2021 (IMF: 8.2 percent).
This is good news for the Chinese trading partners, especially for the emerging growth markets in Southeast Asia. China’s economic dominance in Asia is underlined by the new free trade agreement RCEP (Regional Comprehensive Economic Partnership), to which 14 other countries belong besides China and which is economically more important than the European Union or the North American free trade area USMCA, as around 30 percent of global trade is affected by it are. For all member countries, additional growth impulses can be expected from the coming year from foreign trade, so that Asia will become the fastest growing economic region in 2021.