Page 29 - Industrial Technology EXTRA - Brexit Briefing

BREXIT BRIEFING

ECONOMIC PREDICTIONS FOR 2021

After enduring its deepest recession in 74 years in 2020, the global economy is expected
to rebound in 2021, according to the annual Top-10 Economic Predictions by IHS Markit

1 A successful, widespread Covid In emerging markets, where inflation is a GDP growth is projected to be near 3.0% in
vaccination program is expected
more immediate concern, monetary easing
2021, with greater downside risks.
to enable a transition to post- is ending but policy rate increases will be
pandemic economic growth of 4.5%: “The rare in 2021. Europe’s 2021 annual growth
rapid deployment of effective vaccines and 8 rates are expected fall short of
reopening of economies should gradually The global financial sector expectations: The Covid-19 virus’
unleash a new wave of spending on travel 5 should avoid major crises next prevalence and related containment
and services, driving robust growth in the year: In advanced economies, measures will continue to hinder the
later part of 2021,” said Sara Johnson, expansionary monetary policies are recovery early in 2021. Lagged increases in
executive director for global economics at expected to keep term debt costs sharply business failures and unemployment is
IHS Markit. “After a 4.0% decline in 2020, the lower. More fiscally constrained emerging forecast to restrain growth as policy support
global economy is expected to expand 4.5% markets will rely heavily on forbearance diminishes, though we expect a pronounced
next year, with global output expected to measures to contain bank losses as the vaccine-driven pick-up in eurozone growth
reach a new peak.” economic rebound takes hold. However, rates from mid-year. Eurozone real GDP is
rising public and private debt burdens could projected to rise about 3.6% in 2021, with the
2 A divergent timeline for lead to significant strains for banks that are return to pre-pandemic levels not expected
until late 2022.
economic recovery, with a return
heavily invested in local sovereign debt.
to economic growth varying
widely across regions: Mainland China Finished goods prices are Mainland China’s economy will
recovered in the second quarter of 2020, but 6 expected to accelerate in 2021: 9 accelerate to its strongest
recoveries to pre-pandemic levels are Increases in commodity prices in growth rate in recent years but
forecast to take until 2023 or 2024 in Japan the second half of 2020 will be pushed the rebound is expected to wane: The
and several major European economies. downstream for the next six to nine months, expected launch of effective Covid-19
While unemployment rates are expected fall leading to higher prices for finished goods. vaccines and pent-up demand will help the
in most regions in 2021 as output recovers, In the second half of 2021, consumption Chinese economy expand 7.5% in 2021, its
Western Europe is expected see a rise in patterns are expected to shift back toward highest rate since 2013. After the cyclical
joblessness as public funding of furlough services suppressed by the pandemic, while rebound, the economy is forecast to return
programs diminishes. goods industries could see conditions soften to the deceleration path that began in 2012,
even as aggregate demand strengthens. as productivity growth slowed in response to
3 A shift in focus of investors and Supply chain disrup-tions should also slowly stalled economic reforms.
be resolved.

policymakers from Covid-19 to
the impact of climate change, The US dollar is expected to
forecasting the trend in ESG issuance to The US economy is forecast to 10 weaken in 2021: A lagged
continue next year: “We expect to see 7 start 2021 slowly, accelerate in response to the Fed’s sharp pivot
continued scrutiny of the ESG contributions the second half: If another modest to monetary accommodation in early 2020,
of new investments and an uptick in the use stimulus bill is implemented soon, and a an increase in investor risk tolerance and a
of sustainability-linked issuance,” continued highly successful Covid-19 inoculation widening trade deficit is expected to drive
Johnson. “Meanwhile, policy support for program is well underway by summer, full weakness in the dollar next year.
renewable energy from key governments year real GDP growth is expected to exceed
and declining costs for wind, solar and 4.0% next year, with a reasonably good ECB policy accommodation should lean
battery power is forecast to accelerate the probability of growth reaching above 5.0% in against substantial further euro appreciation,
energy transition and restrain hydrocarbon the second half of 2021. though expected US dollar weakness and
demand and prices.” continued high current account surpluses
A more significant stimulus bill of more than represent upside euro risk. The Japanese
4 Monetary policies should remain $900 billion would be expected to raise full yen should benefit from strengthening
year US GDP growth to more than 5.0% next
exports and relatively low inflation. The
accommodative: Policy rates in
the United States, Eurozone, the year. However, without additional fiscal renminbi is forecast be supported by
United Kingdom and Japan are expected to stimulus, and if lockdowns are implemented mainland China’s accelerating economy and
remain near or below zero well beyond 2021. to contain the latest surge of infections, real comparatively conservative monetary policy

Discrete manufacturing in the automotive leading contributor to edge analytics Logistics: Growing investment in auto-
and consumer packaged goods (CPG) software in this sector. While India is nomous vehicles in the transport sector
sectors is a major revenue contributor in the witnessing growth in government investment impacts investment in autonomous robots
United States and EMEA. in edge analytics for renewable energy on the factory floor. The use of edge analytics
(mainly solar), green buildings are driving to automate and track the movement of raw
Energy: Edge analytics data can be utilised adoption in Far Eastern countries such as materials and goods on the factory floor is
to make needed adjustments to optimise Singapore, Indonesia, Thailand, and expected to grow substantially over the
energy production. The EMEA region is the Malaysia. forecast period.

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