A global pandemic was not on FT forecasters' radar screen — or anyone else's — one year ago. But it proved, tragically, the defining event of 2020, and will dominate 2021. By pushing the US into recession and sending carbon dioxide emissions tumbling, it confounded two of our more confident
2021 forecast: Will the stock market go up? Will Biden be a lame-duck president?
Financial Times
13 mins to read
Incoming US President Joe Biden faces an uphill battle as he takes over the reins from Donald Trump. Photo / File
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No. The World Health Organization called a Public Health Emergency of International Concern, its highest level of alarm, on January 30 when there were fewer than 100 Covid-19 cases and no deaths outside China. It would be an extraordinary triumph for science, medicine and global politics if the PHEIC were declared over before the end of 2021.
Everything would have to go right, from vaccination campaigns to continued social distancing measures. Covid-19 deaths are now running at about 10,000 per day. The toll is almost certain to be much lower by December but not low enough for the pandemic officially to be over.
- Clive Cookson
Will the majority of the world's 5bn adult population be vaccinated?
No. While governments and health leaders are seized with the knowledge that only the successful global rollout of the vaccine will halt the spread of Covid-19, the extent of coverage looks set to become yet another point of division between rich and poor countries. Efforts are under way to close the gap. Covax, the global initiative for equitable access to immunisation, has agreements in place to secure almost 2bn doses. But logistical difficulties and probable funding shortfalls mean some needy nations will struggle to implement mass inoculation programmes. Even in the UK and US, vaccine hesitancy — a key issue for 2021 — will blunt the effort to ensure a large majority of citizens is protected.
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- Sarah Neville
Will the Conservatives under Boris Johnson re-establish a clear lead over Labour?
No. Labour under Keir Starmer's "new management" is showing gains in every age group and with both sexes. But it will not be easy for the opposition to embed a clear lead either, unless UK voters believe negative effects both of the Brexit outcome and of the pandemic are the government's fault. Pundits and pollsters debate this — there is a suspicion that, despite all the incompetence, the Covid challenge is seen as one that would have confounded any prime minister. Local and mayoral elections in May will test whether the public's patience has run out.
- Miranda Green
Will there be an independence referendum in Scotland?
No, not next year. But there will be a constitutional crisis, if as is likely, the Scottish National party wins a majority in the Scottish parliamentary elections, fuelling demands for a new vote. Only Westminster can grant a legal poll and Boris Johnson will refuse at first. Given the desire to rejoin the EU, SNP leader Nicola Sturgeon is resisting demands to hold an illegal poll so one of the big stories of 2021 will be her efforts to ratchet up the political pressure for a new vote in the next two to three years.
- Robert Shrimsley
Will the Greens be in Germany's next governing coalition?
Yes. No coalition after federal elections on September 26 is plausible without the Greens. A tie-up with the left might be more comfortable, but they will fall short of a majority. So the now centrist Greens, with charismatic co-leader Robert Habeck, will team up with the Christian Democrats. The CDU will soon have to make do without its popular chancellor Angela Merkel, who steps down at the election. It will choose Armin Laschet as next party leader. But when his ratings slide, it will back the more compelling and Green-friendly Bavarian premier Markus Söder to lead the centre-right campaign.
- Ben Hall
Will Brussels charge a country with rule of law breaches in the use of EU funds?
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No. The European Commission first needs to outline guidelines on how to trigger the new provision in the EU budget, which allows it to cut or freeze funds if rule-of-law breaches "directly" affect the use of the money. It will not apply the mechanism until the European Court of Justice has ruled on its legality. Some hope the court could fast-track its decision if it is a matter of urgency. However, a ruling will probably take several months to over a year to materialise. This would give Viktor Orban, Hungary's illiberal prime minister — and primary target of the rule of law provision — ample time to concoct a defence ahead of national parliamentary elections in 2022.
- Anne-Sylvaine Chassany
Will Joe Biden be a lame-duck president?
No. Mr Biden will find it hard to get big reforms past a Republican-controlled Senate. But he will have plenty of leeway to act in foreign policy and via executive action, such as rejoining the Paris deal on climate change, ending construction of the US-Mexico wall and creating a coherent federal policy to tackle the Covid pandemic. If he is lucky he will peel off a couple of Republican votes that he would need to push through the $2tn economic stimulus to "build back better". But don't count on it.
- Ed Luce
Will the US and China reach a trade deal?
No. While the world will see a much more conciliatory tone between the incoming Biden administration and Beijing, none of the fundamental issues between the two countries — from WTO violations to labour and environmental standards to the rules for Big Tech and the digital economy — are likely to be resolved. Mr Biden cannot afford to look soft on the Middle Kingdom for fear of losing swing state support before midterm elections. And China, under President Xi Jinping, has announced it wants to be independent of US technology and supply chains by 2035. The "one world, two systems" problem will prevail.
- Rana Foroohar
Will large-scale demonstrations erupt again in Hong Kong against China's authority?
No. China's imposition of the national security law this year has changed the calculus of would-be demonstrators in Hong Kong. Sporadic protests at Beijing's toughened regime in the territory may erupt from time to time in 2021, but it is hard to imagine these becoming large and sustained. The new law criminalises acts of "secession, subversion, terrorism and collusion" and provides for sentences of up to life imprisonment. Police are also much quicker to pounce on any sign of unrest.
- James Kynge
Will India's economy return to its pre-Covid size?
Yes. India was hit hard by a stringent coronavirus lockdown. Its gross domestic product suffered a historic 24 per cent contraction year on year in the April to June quarter. The economy is estimated to have contracted by as much as 9 per cent in 2020, but is forecast to recover those losses and grow by about 10 per cent next year. The recovery, however, has been accompanied by tremendous dislocation, with larger, better-capitalised companies gaining market share at the expense of mom-and-pop businesses. Despite strong headline numbers, many households and small businesses will still be struggling, a probable drag on longer-term growth.
- Amy Kazmin
Will Nicolás Maduro hold on to power in Venezuela?
Yes. Despite leading his country into one of the world's worst economic crises ever seen in peacetime, with GDP contracting 75 per cent in five years, Mr Maduro has tightened his grip by taking control of Venezuela's parliament in a rigged election. Opposition leader Juan Guaidó has lost credibility after failing to dislodge Mr Maduro and no longer presents a serious threat. With Venezuela's international backers — Russia, China, Iran and Cuba — solidly behind Mr Maduro, his only real worry is a palace coup. That is why he has a large and well-trained team of Cuban bodyguards.
- Michael Stott
Will the US rejoin the 2015 Iran nuclear deal?
Yes. President-elect Joe Biden says Washington will rejoin the accord if Iran returns to "full compliance". Hassan Rouhani, Iran's president, says Tehran will reduce its nuclear activity in-line with the accord if US sanctions are lifted. Both have political motivation to make it happen. Mr Rouhani was an architect of the deal and its fate will determine his legacy. Many in Mr Biden's team negotiated the accord and will want to reverse Donald Trump's decision to abandon it. But there are many potential stumbling blocks. And if a hardliner wins Iran's June presidential election — as expected — it would be even more complicated.
- Andrew England
Will Ethiopia's Abiy Ahmed be re-elected?
Yes, but it will be touch and go. Abiy Ahmed has pledged to hold elections in 2021. An argument over postponement because of Covid sparked a rupture with the Tigray People's Liberation Front, which had dominated for 27 years and fashioned two decades of near double-digit growth. Mr Abiy sent troops into Tigray to quell rebellion, but now faces discontent from other regions seeking greater autonomy. Memories of the prime minister's 2019 Nobel Peace Prize and initial adulation are fading. But odds are he will survive and press on with his vision of a liberal economy and unitary state.
- David Pilling
Will US boardrooms become much less white?
No. America's racial reckoning spread to its boardrooms this year, as campaigners told directors who pledged to do more to address the country's inequities to look in the mirror. Just 12.5 per cent of Russell 3000 directors come from under-represented ethnic and racial groups, according to Institutional Shareholder Services — a fraction of the 40 per cent of Americans who count as ethnic minorities. Nasdaq, California and several investors are now pressing for greater diversity. Could the figure rise to 15 per cent in 2021? Don't hold your breath. Change will be faster than before but slower than many hope.
- Andrew Edgecliffe-Johnson
Will 2021 be a turning point for electric cars?
Yes. There have been false dawns, with sales of electric vehicles in China surging and falling along with subsidies. But EVs have broken through in Germany and Scandinavia as diesel fades. Morgan Stanley predicts global EV sales will rise by more than 50 per cent in 2021. This will happen, with sales nearing 5 per cent of the total from the International Energy Agency's estimate of 3.2 per cent in 2020.
- John Gapper
Will the combined stock market value of the five biggest US tech companies top $8tn?
Yes. After their combined value more than doubled in two years, to $7tn, and with regulators circling, this might seem to be the time to move out of Big Tech. But the five — Apple, Microsoft, Amazon, Alphabet and Facebook — have ridden out the crisis in better shape than most. Amazon's Jeff Bezos has seen his fortune swell. The additional $160bn in combined revenues the five are expected to generate next year, or an increase of 13 per cent, will shine as the world struggles to get past the pandemic. With a surplus of cash looking for a home, such assured growth at scale will be hard for investors to resist.
- Richard Waters
Will more than half of European office workers be back in the office?
Yes. Many office drones liked working from home in lockdown but for those in cramped housing, or with home-schooling obligations, life was not so rosy. Morgan Stanley's regular surveys of workers in five European countries indicated 28 to 30 per cent of office staff did not work from home at all after the summer. A further 11 to 14 per cent did not want to in future. A majority of staff want to work at least one day a week from home — and they should have that choice — but, with vaccines available, at least half will return to the office for more than two days out of five. A few may even learn to enjoy it again.
- Andrew Hill
Will the S&P 500 finish above 4,000?
Yes. The global benchmark of investors' confidence had a great run in 2020, thanks to the largesse of central banks and governments, wrapping up the year with a gain of about 15 per cent. The rollout of vaccines means stocks that had not recovered so well since March — think energy and financials — have scope to catch up, while it is hard to imagine a serious hit to the star tech performers. That makes a 9 per cent gain from current levels sound achievable. The main risks are inflation that pushes up bond yields, premature signalling from policymakers that support could be withdrawn, or a serious regulatory hit on tech.
- Katie Martin
Will global carbon emissions return to pre-pandemic levels?
Yes. Emissions plunged by an estimated 7 per cent in 2020 after Covid-19 sent the global economy into a coma, the biggest annual fall since the second world war. But daily emissions are already edging back to what they were in late 2019, not least in China, which accounts for more than a quarter of global emissions. The EU wants a green recovery but the stimulus plans in other large economies are still skewed towards fossil-fuelled sectors. This suggests emissions will rebound as they did after the 2008 financial crisis, despite the pledges countries make in the run-up to November's COP26 UN climate summit in Glasgow.
- Pilita Clark
Will oil prices stay above $50 a barrel?
Yes. The oil market has been given a boost amid the rollout of mass vaccination programmes. But after months of lockdowns and travel bans that collapsed consumption and prices, can this optimism hold? As the global economy rebounds, consumption will pick up. This may offset any additional barrels coming from Opec, Russia and allied partners, which enacted record production cuts. Their alliance is looking fragile, but the worst of all scenarios would be any plan to unleash millions of barrels unchecked. Keen to avoid another plunge in prices, it is more likely that any tapering will match any demand rebound.
- Anjli Raval
- Financial Times
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