Economy

2020 was a much-awaited year for many. New government plans, initiatives, technological developments, etc were expected in the year. But no one anticipated it to be a year of lockdowns and grieves over lost lives. For the first time in a century, a pandemic hit the world hard and restricted us from all the routines. The global economy also endured its deepest recession in 74 years. But 2021 was different. The year shined a ray of light at the end of the tunnel. Even though Covid-19 has slowed down the growth for the next several years and impacted the economy in long term, 2021 emerged with better outcomes. A PwC report predicted the global economy will grow 5% this year. Henceforth, IndustryWired has listed five trends that will shape the healing of the economy in 2021.

Economy going up because of Covid-19 vaccines and inoculation programs

2021 is the year of hope for people. It began with companies announcing that they have come up with a successful vaccine and the governments also did not delay approving or distributing it. Even on the very day when the vaccine’s success and rollout were announced, share market prices hit high. However, it was not easy for vaccinations to go through as new variants of coronavirus emerged from many parts of the world. Fortunately, that doesn’t have any direct impact on the economy. The global economy is projected to grow 5.5% in 2021 and 4.2% in 2022. The 2021 forecast is revised up 0.3% point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year.

Travel and luxury services will get their ground back

While some nations like India are going into lockdown due to increasing cases, some other nations such as the UK are opening up restaurants and pubs for routine. But the direct growth of an economy is anticipated to be seen only in the second half of 2021. More inoculation programs and the fight against Covid-19 are believed to raise revenue. However, as a reflection on 2020s public and private debt, the government will try to support people more with productive schemes. Henceforth, this will open the door to an increase in travel and luxury services which will strengthen the economy further. 

Efforts on green infrastructure intensify

Governments’ are increasingly becoming aware of climate change and global warming impacts, so are people. This has pushed major economies like the United States, European Union, and China to refocus on their fight against man-made slow disasters. The US is already making efforts to join the Paris Climate Accord. EU member states are expected to finalize their plans to accelerate the transition towards a greener economy by the end of April. The EU Commission is expected to release the first tranche of grants and loans worth around 0.5% of Eurozone GDP to speed up the process. Besides the inoculation programs, the efforts to heal the world from man-made calamities will further strengthen the economy.

The housing market will remain stubborn

The government initiatives on low interest rates and low inventory for home buyers will motivate them to invest in buying new properties. National Association of Realtors (NAR) suggested that the Covid-19 pandemic will affect the housing market in 2021. But that doesn’t happen throughout. After an initial dip in housing prices in the early months of the pandemic, housing prices bounced back and rose significantly. Now the housing market is going on a wave according to the condition of the Covid-19 pandemic. Realtor.com expects sales prices to increase by 5.7% in 2021. 

US dollar is anticipated to weaken

In 2021, the US dollar is expected to lose its ground to monetary accommodations in early 2020. The reason behind this is the increase in investor risk tolerance and a widening trade deficit. Meanwhile, the euro will climb up surpassing US dollar risks. The Japanese Yen will also benefit from strengthening exports and relatively low inflation. China will also see a spike in renminbi because of the increased trade in its mainland and the implementation of monetary policies.