The coronavirus crisis has caused the worst economic and social shock in the last 70 years. The virus leaves 2020 with 1.6 million deaths and more than 74 million people infected worldwide, a more indebted economy and public spending that will take global leverage to 265% of GDP, according to Standard estimates. & Poor’s.
In the first year of what the UN has decided to call the “Decade of Action”, some of the trends that had been identified within the 2030 Agenda have accelerated, such as the digital or ecological transition, while others show worrying signs of regression such as the fight against poverty or equality, predicting an increase in geopolitical tensions in the coming years as well as a possible rebound in raw materials.
As every year, the large investment banks have carried out their analyzes of the economic outlook and have identified what will be the main trends for the next 365 days.
In general, entities estimate global growth in a range of 5-6% and, as S&P assures, one of the biggest challenges for politicians will be to gradually withdraw the stimuli approved this year without affecting economic growth.
These are the ten key trends that will mark 2021 if new black swans do not appear to end them over the next year.
Vaccine Advances
Most of the entities trust that progress will be made in the Covid vaccine that will allow a return to normality. The least affected sectors may get their income back to normal by the end of 2021 and for the most affected sectors it may be postponed to 2022 or later, as predicted by S&P experts in their Global Credit Outlook 2021 report.
For Mark Haefele, Chief Investment Officer Global Wealth Management at UBS, “the approval and distribution of a coronavirus vaccine for the second quarter, the fiscal policy measures and the legislative deadlock that emerged from the polls in the United States will make it possible for the end corporate profits in most regions have recovered to pre-pandemic levels for the year We expect markets and sectors most sensitive to economic developments, many of which lagged in 2020, to emerge in 2021”.
The entity believes that there will be, “more uneven and more local and that it will result in long-term returns below average in all traditional asset classes. But we believe that investors do have the opportunity to obtain higher returns by positioning for , the financial technology and health technology, and for a more sustainable one in green technology”.
For BBVA Research, the recovery of global activity is expected to gain momentum in 2021. The expected approval and distribution of vaccines and effective treatments against Covid 19 will probably allow a progressive relaxation of social distancing measures throughout the year. next year, first in the major world economies, and then in the others.
In any case, S&P considers that there are still uncertainties about the production, distribution and acceptance capacity of the vaccines themselves.
Santander believes that liquidity and highly rated bonds would continue to have negative real returns
For Banco Santander, it is unprecedented and there is a global consensus that support programs should be maintained until the economic recovery is solid.
“Central banks are not even considering raising interest rates. Asset purchases would continue to provide ample liquidity to financial markets,” they say. In this environment, the entity considers that liquidity and highly rated bonds would continue to have negative real returns.
Key year for banks
For S&P, the situation goes even further. 2021 will be a test for banks and will reveal the impact of Covid. Although the credit rating agency believes that most banks will overcome it with confidence, the challenges for banks will focus on low rates, new forms of competition, investment in digitization, cost structure and the growing need for invest with ESG criteria.
A third of the banks maintain a negative perspective and around 36% of the companies and governments that the company rates also maintain this bias, but the entity assures that it does not expect major changes in a negative sense, although it adds that for the European case it does predict that a good number of restructurings and insolvencies take place with the withdrawal of the stimuli.
Biden in the White House
Several of the big trends are located in 2021 in the field of geopolitics. A new tenant in the White House, the tension with Asia or, as UBS defines, “Europe’s two steps forward and one step back”, alluding to Brexit.
UBS indicates that the new political leadership in the US will bring more fiscal stimulus and more predictable policies, and that the course of the market will therefore change.
“We expect fiscal stimulus and a vaccine rollout to drive economic recovery and outperformance of mid-caps and certain cyclical sectors, relative to large-caps. In our view, the US dollar will depreciate.” , indicates USB.
Citi analysts expect the “US to actively re-engage with European allies, Japan, Australia and others to create common goals and standards for trade, technology, climate and health policies. China, too, will develop its own rules and practices.
For Citi there are a series of trends that are unstoppable such as the future of energy, digitization, increased longevity and .
asian growth
Asia has shown remarkable resilience. This is especially true in China, whose total capitalization in the stock market reached a new record in October 2020 thanks to the use of movement control technology, mass tests and temperature monitoring that have allowed lower incidence of the virus in this area.
Asia will experience the largest growth in the global middle class by 2030 with 1.5 billion people. It will probably add a hundred cities with a population of more than a million. And it has become the largest free trade zone in the world with the Regional Economic Partnership Program (RCEP).
Longevity
All these inhabitants, in addition, will be much more long-lived. The world is facing an unprecedented situation of demographic change. In 2019, the population aged 65+ stood at 703 million, or one in eleven people. By 2050, it is expected to double to 1.5 billion, or one in six people. Those aged 80 and over are likely to increase even more rapidly, from 143 million to 426 million, as a result of many decades of improving life expectancy and declining fertility.
Green energy
This sharp increase in population will require more sustainable resources for the planet. The energy sector will experience a profound transformation and an alignment of environmental objectives, as explained by Goldman Sachs, which highlights as one of the keys for 2021 the appointment of the next Climate Change Summit in Glasgow, China’s environmental commitments and the that the United States is expected to take over. Bank of America Securities, for its part, expects a sharp increase in green bond issuance.
oil demand
Goldman Sachs calculates that at 6.7 million barrels per day or 7% in 2021 with the launch of the Covid-19 vaccine, which will boost the global economy and lead to a further recovery in transport demand. Barclays pronounces along the same lines, assuring that oil may be one of the winners for this coming year.
digitization
The arrival of 5G, new ways of working, artificial intelligence and digitization in health will be some of the key points for this next year.
Inequality
Juluis Bär considers that inequality issues have become more prominent. “Our findings reveal that support packages that provide aid to those in need have been strongest in countries with greater equality, suggesting a deepening divide in countries with less equality.”
“The ethical debate about how to balance the health and wealth risks of the crisis has intensified, complicated by a lack of information and our perception biases. What is clear is that there is no black and white in this debate, but different shades of gray” indicates the entity.
And finally, Europe and its greatest union as they face the last blows of Brexit.
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