Slowly but surely the fog of uncertainties is dissipating and the view of the new year is becoming clearer. In a few days, Joe Biden will be sworn in as the new president in the United States and can look forward to a wafer-thin majority in the Senate, which should make governance much easier. And a chaotic Brexit was avoided in Europe. This removes two serious uncertainty factors. The stock markets are already celebrating this with new record highs.
Now the focus is again on the question of how the economy and thus corporate profits will develop. For the time being, the second corona wave is raging, especially in Europe and the USA. As in the spring, the renewed lockdowns are putting a strain on the real economy. Germany and Co. are – at least technically speaking – in a recession again. After the fourth quarter of 2020, the economy should also decline in the first quarter of the new year.
But vaccination campaigns against Covid-19 have started worldwide. Despite all the mishaps, the success reports in this regard should predominate in the coming months. More vaccines will come onto the market, production capacities will be ramped up and the western states will also get a better grip on the infrastructure. Asians have an advantage, as they have significantly more experience with virus epidemics.
Worldwide economic upturn
With the increasing immunity of the population, a synchronous upturn in the most important economic zones can be expected. Unfortunately, that doesn’t happen overnight. From the start of the vaccination campaigns, it should take about three months for nurses, medical staff and particularly vulnerable groups such as the elderly and high-risk patients to be vaccinated. But by spring many people should have received the two necessary vaccine doses. Warmer temperatures should also provide relaxation. By then, at the latest, the economies could pick up momentum again.
In China, the strength of the economy remains unbroken. The People’s Republic is taking extremely consistent action against the virus pandemic. Most recently, a few hundred new infections were enough to seal off two megacities in Hebei province. In the past year, China was one of the few developed countries whose economies grew despite Corona. Now growth is likely to accelerate massively. For the year as a whole, an increase of eight percent for the Chinese gross domestic product is quite conceivable. Other emerging economies in Asia are also showing considerable growth dynamics. The new free trade area RCEP should also contribute to this in the future.
USA amazingly robust
The US should follow suit. The economy there recovered faster than expected after the first lockdowns in April. It is true that the upward movement of the economy has stalled due to the second wave of the pandemic. But now the new President Joe Biden has largely a free hand after winning two Senate seats. The $ 908 billion stimulus package that Democrats and Republicans agreed on before they took office is likely to have only been the beginning.