{"id":14912,"date":"2021-03-01T14:38:34","date_gmt":"2021-03-01T11:38:34","guid":{"rendered":"https:\/\/financer.global\/?p=14912"},"modified":"2024-01-05T19:46:43","modified_gmt":"2024-01-05T16:46:43","slug":"state-of-finance-2021","status":"publish","type":"post","link":"https:\/\/financer.global\/blog\/state-of-finance-2021\/","title":{"rendered":"The State of Finance: Global Financial Trends For 2021"},"content":{"rendered":"\n

We can all agree that 2020 was a year to be remembered.<\/p>\n\n\n\n

Whether or not you’re one of the many individuals around the globe whose personal finances were affected by the events of 2020, you’re probably wondering what to expect from 2021 and beyond.<\/p>\n\n\n\n

We’ve taken a deep dive into the past year and looked at what the top financial experts and organizations predict for the year ahead.<\/p>\n\n\n\n

Keep reading for a global look at the current state of finance and the top financial predictions for 2021.<\/p>\n\n\n\n\n\n

The pessimistic vs. the optimistic outlook <\/h2>\n\n\n\n

There are two very different potential economic outlooks for 2021. We have presented each of them below, including the chain of events that may lead us to a prolonged recession or a much-awaited path to recovery.<\/p>\n\n\n\n

Pessimistic Outlook<\/strong><\/td>Optimistic Outlook<\/strong><\/td><\/tr>
1. Coronavirus uncontained
2. Prolonged lockdowns
3. Unemployment rises
4. Global trade struggles
5. Stock market crash
6. Ineffective stimulus plans
7. Global stagflation
8. Commodity prices soar
9. Long recession<\/td>		1. Coronavirus contained
2. Economies fully operational
3. Unemployment falls
4. Global trade recovery
5. Stock market grows steadily
6. Stimulus plans halt
7. Global inflation rates below 2%
8. Commodity prices stabilize
9. Economic recovery<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

<\/p>\n\n\n\n

The economy’s fate in 2021 will also determine the long-term economic outlook. We will now argue that the optimistic scenario seems more likely, but a negative reversal is also in play.<\/p>\n\n\n\n

Will Europe’s Next Generation EU and Biden’s economic policies stabilize the global economy and set the world on track for a brighter and more sustainable future?

Will Asian economies gain ground in trade and technological innovation and set the foundations to become the dominant forces in the global scene?<\/p>\n\n\n\n

Read below to find out what the experts have to say.<\/p>\n\n\n\n

A New Normal<\/h2>\n\n\n\n

To analyze the trends of 2021, we need to look back at 2020 and where we are starting from. Black swan events, such as the Coronavirus pandemic, affected every country. However, that doesn’t mean we’re all starting the new financial year in the same boat.<\/p>\n\n\n\n

In the following graph, you can see the GDP growth and unemployment rates of the top 10 GDP countries in the world.<\/p>\n\n\n\n

GDP growth and the unemployment rate <\/h4>\n\n\n\n

2020<\/h6>\n\n\n
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\"\"<\/figure><\/div>\n\n\n

The top 10 GDP countries had higher unemployment rates and decreasing GDP growth in 2020.<\/p>\n\n\n\n

The United States had a GDP growth of just 3.1%, smaller than Canada and all their European counterparts, and an unemployment rate of 8.1%, more than double the rate recorded in February.<\/a> <\/p>\n\n\n\n

China has the best GDP growth\/unemployment ratio, while Japan has the lowest unemployment rate, just above 2%.<\/p>\n\n\n\n

Since GDP growth and unemployment rates are strongly inversely correlated, we expect a reversal of the 2021 unemployment trends to be drastic as soon as global lockdowns and travel restrictions end.<\/p>\n\n\n\n

The financial implications of COVID-19<\/strong><\/h3>\n\n\n\n

The year 2020 will forever be defined by the worldwide Coronavirus (COVID-19) outbreak.<\/p>\n\n\n\n

At the time of writing, there have been over 114 million cases and over 2.5 million lives claimed<\/a>, and devastatingly, those numbers continue to grow daily.<\/p>\n\n\n\n

This highly contagious virus has not just impacted those infected in specific countries or sectors. However, the whole world has felt the impact of COVID-19, and for many, that impact was financial.<\/p>\n\n\n\n

Less than a flying start for the travel industry<\/strong><\/h4>\n\n\n\n

Unsurprisingly, the aviation industry has been one of the most brutal hits throughout the pandemic, and IATA described the severity of the situation in their December 2020 Air Passenger Market Analysis<\/a>.<\/p>\n\n\n\n

“The year 2020 brought an unprecedented challenge to the airline industry through closed borders, strict travel controls, and depressed travel confidence \u2013 all effects of the pandemic.<\/p>\n\n\n\n

RPKs plunged by a dramatic 66% compared with 2019 \u2013 eight times faster than during the 12 months following the 9\/11 attacks \u2013 considered the most severe aviation crisis before 2020.”<\/p>\n\n\n\n

With many countries still in lockdown worldwide and borders closed, we don’t expect the aviation industry to pick up for some time.<\/p>\n\n\n\n

Change in revenue and estimated loss within the aviation industry<\/h4>\n\n\n\n
2019-2020<\/h6>\n\n\n\n
\"\"<\/figure>\n\n\n\n

According to this data from IATA, Asia Pacific took the most significant financial loss during the peak of the crisis in April 2020, followed closely by Europe.<\/p>\n\n\n\n

All continents had a minimum percentage change in revenue from the previous year of 27%, with Europe and Latin America over 40%.<\/p>\n\n\n\n

Losses in the hospitality industry<\/strong><\/h4>\n\n\n\n

The hospitality industry also saw a significant drop in 2020. The graph below reveals the revenue growth in percentage from 2018 to the estimated numbers of 2024 in the United States, as predicted by Statista<\/a>.<\/p>\n\n\n\n

Unsurprisingly, all sectors,<\/strong> from cruises to package holidays, suffered losses in growth from 45-70% in 2020. However, Statista expects growth to rise steadily over the coming years and, by 2023, be at the same level of year-on-year growth experienced from 2018-2019.<\/p>\n\n\n\n

Estimated percent change in revenue in the travel and tourism market in the United States<\/h4>\n\n\n\n
2018-2024<\/h6>\n\n\n\n
\"\"<\/figure>\n\n\n\n

The future of travel is hard to imagine, but based on the previous summer, we can predict countries that could cope better with the pandemic to be the most popular.<\/p>\n\n\n\n

Writing for Foreign Policy<\/a>, Elizabeth Becker believes some countries might not want to return to pre-pandemic tourism levels. “Overnight, much of the world went from over-tourism to no tourism. Since then, locals have seen how their lives have improved without those insane crowds: clear skies with vistas stretching for miles, a drastic reduction of litter and waste, clean shorelines and canals, and a return of wildlife.”, which she says could make travel to such places more expensive than we have become accustomed to.<\/p>\n\n\n\n

Estimating this approach will sharply contrast with other governments who “will compete for the shrinking tourist dollar by racing to the bottom, allowing the travel industry to regulate itself, using deep discounts to fill hotels and airplanes and revive over-tourism.\u201d<\/p>\n\n\n\n

<\/p>\n\n\n

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“Other governments will compete for the shrinking tourist dollar by racing to the bottom, allowing the travel industry to regulate itself, using deep discounts to fill hotels and airplanes and revive over-tourism.”<\/p>\nElizabeth Becker<\/cite><\/blockquote>\n\n\n\n

We predict that trends such as local ‘staycations,’ road trips<\/a>, and camping will also likely grow in popularity in 2021 as travel lovers find a new appreciation for their local gems and avoid the cancellations and uncertainty which plagued holidaymakers in 2020.<\/p>\n\n\n\n

Will vaccinations save the day?<\/strong><\/h4>\n\n\n\n

As many industries remain at a standstill and businesses become desperate to reopen, the recent vaccination measures could not have come soon enough.<\/p>\n\n\n\n

Countries with a highly vaccinated population could experience the following benefits:<\/h5>\n\n\n\n