We want to use the turn of the year for an overview of the current global challenges and an outlook on developments in 2021, the year of the «Great Reset».
Let's start with a brief look back at 2020. Definitely it was a year that none of us will forget.
Seldom before in recent history have there been such dynamic and far-reaching developments in such short succession as in 2020.
The covid-19 pandemic has changed our lives extensively and caused the greatest shock to the global economy since World War II.
While entire countries have imposed lockdowns in the fight against the pandemic and have almost shut down public life, the financial markets have come under massive pressure.
While more than 1.8 million people have died from the virus to date, our work- and social behavior has changed permanently.
These developments have also been a tough test for international governments and not all of them were up to the task.
With a view to the presidential election in the USA, the year ended dynamically and rather unusually from a political point of view as well.
All in all, the turn of the year offers an uncertain start in 2021.
How will it go on?
Even as positive-realistic thinking people we understand that not everything will be back to normal in 2021. Rather, there is a «New Normal» to which we have to adapt.
Especially before the World Economic Forum annual meeting, which will take place in Singapore from May 18 to 21 this year we expect a lively development.
We are of the opinion that we are heading towards very volatile times, which also show more risks for exposed personalities.
Aspect I: Recovery from the pandemic
While a comprehensive launch of a vaccine in the first half of 2021 will positively stimulate the financial markets, we expect a volatile situation and setbacks from new outbreaks.
Further we expect the financial markets to react sensitively to such setbacks.
We find that numerous analyzes, especially by major banks, give a highly positive outlook for 2021 and focus on the stability of the financial markets.
At Schöning & Partners we do not fully share this view.
Thanks to the monetary countermeasures the actual effects on the global economy are hardly visible so far.
However, we believe this will change in 2021 and we consider the risk of a major and long lasting economic crisis to be high.
Aspect II: Geopolitics
The unusual course of the presidential election in the USA creates further uncertainty.
We expect that the final outcome will have a noticeable impact on world politics in the first quarter of 2021 and may hold surprises in store.
Apart from that, this year we also expect a further deterioration in the overall picture of geopolitical processes with a focus on the big three - USA, China and Russia.
In this regards, we recommend the analysis «Geopolitics in a post-pandemic world: A fragmented world» published by IHS Markit.
What do others say?
Lombard Odier: In it’s Global Investment Outlook 2021, Lombard Odier brings an optimistic and energetic analysis to the table.
We quote from the article: «Let us begin our annual outlook with a bold statement: 2021 will be the year when the COVID crisis ends. More precisely, it is now clear that the right set of tools will be available by the middle of next year to definitively control the pandemic. And one lesson of the past months is that when virus-related restrictions are lifted, the economic catch-up can be rapid – as experienced during the third quarter of 2020. The examples of China and other Asian economies are also telling.»
Blackrock: Definitely worth a read is the analysis «2021 Global Outlook - A new investment order» published by Blackrock.
According to Blackrock analysts «we have entered a new investment order. The Covid-19 pandemic has accelerated profound shifts in how economies and societies operate across four dimensions: sustainability, inequality, geopolitics and the joint macro policy revolution.»
The Great Reset
Unveiled in May 2020 by the United Kingdom's Prince Charles and WEF director Klaus Schwab, it may be understood as a program to rebuild the economy sustainably after the covid-19 pandemic.
According to the World Economic Forum, we now «enter a unique window of opportunity to shape the recovery, this initiative will offer insights to help inform all those determining the future state of global relations, the direction of national economies, the priorities of societies, the nature of business models and the management of a global commons.»
We are now starting the year of the Great Reset, which will probably again hold numerous challenges and surprises in store.
We are convinced that it will pay off once more to keep calm and remain agile in order to be able to react quickly to changing circumstances.
In all the uncertainty, we give our clients the security of being at their side in 2021 and of loyally and energetically supporting them as usual.
We wish you all the best for the new year and thank you for the trust you place in us.