4 Factors of Uncertainty that will Define the 2021 Economy

Since the outbreak of the pandemic, uncertainty has become a constant.  At the beginning of 2021, the suspense remains. Different risk factors threaten the good performance of the world economy. There are great unknowns that persist, and we are going to talk about four of them.

Vaccines, restrictions, and possible mutations

Biological and operational unknowns will affect the economy in 2021, including all the factors linked to the coronavirus. Problems in the production, logistics distribution, and administration of these treatments by governments cause delays in the vaccination campaign.

However, the deployment of mass vaccination started at the end of 2020. It will be gaining traction during the first quarter of 2021. According to forecasts, normality will be reached in the middle of the third quarter of 2021. Still, the economic recovery has to wait until 2022.

The ability of companies and families to survive the crisis

These unknowns stem from the tensions in the private and public sectors, highlighting the poor state of companies and families’ balance sheets in the face of the pandemic’s economic impact.

Stimulus measures, growth and inequality

Economic uncertainties, including the scope of stimulus measures applied by governments and central banks, generate a long-term disruptive effect. The pandemic mainly affected the services sector and direct trade. It has harmed the world economies.

Global diplomacy after Trump and Brexit

Finally, geopolitical uncertainties occupy a prominent place in 2021. Several factors will mark the immediate future of the world economy. These are the arrival of Joe Biden to the US presidency, the reinforcement of the European Union, and China’s growing role. Analysts think that President Joe Biden’s administration will most likely not change the US’s current position regarding its trade deal with China.

The Asian giant is forecast to play a key role in the global recovery. It is part of China’s explicit strategy of making the US economic surprise in this decade. It has come out of the coronavirus crisis before anything else. The country closed the previous year with a growth of 1.5%.

Meanwhile, experts highlight a reinforced EU. However, it is different from the one that existed in the past five years. There have been changes made in community leadership, succession. Besides, the succession of German Chancellor Angela Merkel is uncertain. 

Recovery funds and the completion of Brexit have affected EU economy. Also, there is uncertainty about the possibility of redoing ties with the US after four years of conflict with Trump. 

Analysts estimate that Europe will emerge economically damaged from this crisis, but strongly strengthened institutionally.