Economic slowdown

The global economy will continue to be in a tailspin, even in the year 2021. Even if a set of vaccines is finalised by the first or second quarters of 2021, it will take about 18 to 24 months to roll them across the world. So, some parts of the world may continue facing lockdowns or restrictions on economic activity.

The IMF has already predicted that global GDP will decline by 4.9 per cent in 2020. In 2021, we can at best hope for a flat GDP, with no growth, even though IMF is optimistic and predicts a growth of 5.2 percent.  Unemployment which has increased due to stoppages of industries will continue to rise in 2021 also. Large numbers of unemployed persons, pose a sociological issue. There could be violence or agitations in nations, which are unable to offer jobs and do not have adequate social security systems. The violence in Nigeria, in the last fortnight of October, was partly triggered by the 40 per cent unemployment in the country. So, we cannot expect any significant investments or new industries in 2021 in most countries.

Governments across countries should plan welfare schemes, mass feeding programmes, community kitchens, cash benefits, etc., for the weaker sections of society, through 2021. Small and medium industries will also need support from their governments. Increasingly, some of the smaller or weaker nations may face de facto bankruptcies and will seek bailouts from the IMF or the World Bank. Countries may just have to print more currency to support the weaker sections and risk some inflation. We can correct economic imbalances and fundamental from 2022 onwards.

To protect 2021, communities and governments make stringent efforts to control COVID-19 cases, by educating their citizens to take adequate precautions. The recent shutdowns in France, Germany and now UK, are a chilling reminder that COVID-19 has to be managed diligently, since it can erupt again anytime and stunt economic growth.

Rajendra Aneja
Mumbai, India