The Agenda: Forecasting 2021

How can the economy recover?

It's clear the pandemic sent the global economy into one of its worst recessions on record. Stock markets around the world have suffered dramatic falls.

Even prior to the virus becoming a pandemic, economists estimated most major economies would lose at least 2.4% percent of the value of their gross domestic product (GDP) during 2020, which led economists to reduce forecasts of growth from around 3 percent to 2.4 percent.

This may not initially appear to be a significant drop, but because global GDP was estimated to be around $86.6 trn, this 0.4 percent drop equates to a loss of almost $3.5 trn. And all that was predicted before the new strict social and travel restrictions. 

The progress on vaccines has now brightened the economic outlook somewhat – but what can we expect from 2021?

Jim O'Neill, economist and former chair of Goldman Sachs Asset Management, says there is reason to be optimistic. 

"If the vaccine rollout is successful – and I emphasize 'if' – then actually the sectors that have suffered the most from COVID-19, particularly travel and tourism, by the second half of this year might actually be booming.

"You can see some signs of hope about that in the way some stock market prices are behaving – but also the way some advance bookings are being conducted by optimistic consumers in many parts of the world."

Few could have predicted the economic chaos that would be caused by the coronavirus pandemic – but but for the eminent economist John Kay it came as no surprise. His book is aptly called Radical Uncertainty: Decision-making for an unknowable future and on The Agenda Kay told Stephen Cole why preparation – even for unlikely events – is key.

"I hope the lesson from the crisis for us is that we should stay away from trying to make predictions of the future," he said, "and back to saying 'How do we make our businesses and our professional lives robust and resilient to things that we know might happen, but we can't predict?'"

China's economy was one of the few to emerge from the first wave of the pandemic relatively unscathed, getting back to normal far sooner than many expected. Indeed, The World Bank's China Economic Update predicts growth of just short of 8 percent for 2021.

For more on China's instant recovery, Stephen Cole spoke to Li Wei, professor of economics at the Cheung Kong Graduate Business School. Perhaps counterintuitively, he said that in the fight against COVID-19, the economy must come second in the short-term for it to survive in the long-term.

"I think what what China and many other Asian countries have demonstrated that you should focus on getting it under control and don't worry about the economy," he said. "And I think the priority ought to be the COVID-19 first and then the economy. And I think that worked out pretty well for China and China's neighbors."

Can we get back to saving the planet?

With COP 15 in Kunming and COP 26 in the UK, 2021 is a big year of action for the planet. Researchers say there was a record drop in global carbon emissions from using fossil fuels during 2020, partly due to lockdowns prompted by the pandemic.

But it wasn't all good news. Tasneem Essop, executive director of Climate Action Network – the largest global network fighting the climate crisis – told The Agenda that the pandemic most harshly affected those who were already suffering most from climate change.

"While, of course, the environmental focus is going to be seriously important, we need to recognise that the key lesson that we learned from 2020 was that the pandemic and the climate impacts that we experienced had the same impacted communities across the world.

"Those who were hit the hardest were living in poverty... were front-line health workers... they are the same people. So the big issue, I think, for 2021 when it comes to environmental issues is to make the links between those vulnerabilities."

Manuel Pulgar-Vidal, formerly Peru's environment minister and now the World Wide Fund for Nature's climate and energy global practice leader, told The Agenda about the many obstacles which must be overcome when attempting to reverse the damage.

"We are implementing an agreement in a difficult time, not only because of the pandemic – the pandemic has brought many complexities to the process – but also because of the emergence of denialism, polarization, more political difficulties," he said.

"But the idea is that by 2021 we could recover."

Will we ever pack a suitcase again?

There were few industries hit harder in 2020 than aviation. Passenger demand fell by more than half, hundreds of billions of dollars of revenue were lost, and tens of thousands of jobs disappeared across the industry.

But is there some light on the horizon for 2021?

Alexandre de Juniac is director general and CEO of the International Air Transport Association. He told Stephen Cole that he wants governments to take a different approach:

"The good news, as everyone knows, is the arrival of the vaccine [which] should be available on a large scale," he said. "We would normally see borders being significantly re-opened all over the world.

"What we are advocating for is that states do not wait for that date, but reopen their borders to allow the air traffic to restart. We are proposing not only a simple removal of the travel restrictions but the replacement of systematic testing."

However, De Juniac said he's not concerned about a lack of appetite for a return to the skies.   

"When we look at the domestic market in countries that have successfully fought against COVID-19 – and China is probably the best example – the level of traffic is of the same figure as 2019, so the appetite is there.

"The point is that governments are closing their borders... quarantine measures are a major deterrent for passengers to come." 

Of course, what the airline industry really needs is for travel and tourism to get back to something like normal. So, is that likely in 2021? Simon Calder, senior travel editor at the Independent newspaper, isn't sure.

Calder says his main concern is that tourists – even after being vaccinated – will still be hesitant to travel in fear of cancellations, which he fears could rock the industry for years to come.

"A whole lot of people are saying, 'Actually, we don't want to take the risk, we're going to give it another year. And we may even, because of our uncertainties about travel, never travel again in the same way.'"

Will we cheer on our sports stars?

In 2020 most of the world's biggest sporting events were called off – the Tokyo Olympics and football's European Championships to name but two. Sporting stars have returned to some kind of action, but is it too early for fans to dust off their foam fingers?

Sebastian Coe knows a thing or two about elite sports: having won four Olympic medals, including two golds, he is now president of World Athletics. Even so, when Stephen Cole asked him whether he agreed with the International Olympic Committee's longest-serving member saying that Tokyo-bound athletes should be among the first to receive a COVID-19 vaccine, Coe said they may be hesitant to do so.

"It's really important that the vaccine goes to people that are vulnerable – frontline services, emergency services," he said. "I think the athletes recognize that. 

"If the athletes do have access to the vaccine, they should take it. But I think most athletes would be a little nervous about elbowing their way in front of vulnerable people or health service workers in all our communities."

Even if the major events take place, they may do so in front of reduced crowds or none at all. And while it might not decide the winners and losers, for broadcaster and author Mihir Bose, the absence or presence of fans will be of huge importance.

"I think the impact is tremendous," he said. "The interaction between fans and the players is very important. A player scores a goal, the fans react. The players get that energy from the fans. A cricketer hits a boundary, scores a hundred, and the adulation he gets makes a huge difference. And it has a huge impact. And that certainly affects performance."

What's written in the stars?

Finally, when making predictions about what lies ahead for 2021, many people decide to look to the stars. Susan Miller is one of the world's best-known astrologers, and she's been telling Stephen Cole it'll be a year of rebuilding and collaboration.

"We're going to decide what stays, what goes," she said. "We don't have to go back to our old life and I don't think that's even a possibility. We will create a new life that's more fitting with the technology we have now and what we want to do with our time.

"Also, the planets are moving into Aquarius. Aquarius is a sign of groups working together. They don't care who gets the credit. People will not rely on the government for stimulus. It will be more philanthropy and people helping people on any scale that they can because Aquarius is very humanitarian."

When asked what UK prime minister Boris Johnson’s future has in store as a Gemini, Miller was optimistic.

"He'll be in a very philosophical kind of way and work a lot with other nations," she said, "to repair all relations we have with our friends abroad.

"May 13 to July 27 he's going to do something then that gets so much applause and oh, it'll be great news for the prime minister."