Post COVID-19 Economic Predictions
With a futuristic economic outlook of 2 fiscal years, I shall in brief express my analysis and evaluation of the situation for the upcoming 8 quarters (Jan 21 — Jan 23).
Seeing a gradual yet insignificant increase in industries such as aviation, retail and hospitality towards Q4 of 2020, I believe Q1 of 2021 is likely to being with certain industries beginning to work at their complete productive potential. The beginning of these industries in unlikely to bring about a high trend, yet the substantial peak will aid in industries seeking benefits. As with production, output is likely to remain low due to the fall in investment reserves and consumer demand. However, with gradual trends i believe restoration of the situation can be completed, with 2 assumptions (consumer activity and spending is correlational to their income brackets/investments are likely to increase and capital market functioning is likely to boost once profitability see’s it’s view). With such parameters, economic market restoration with respect to production and price levels can be as of average norms by Q1 of 2022.
The 1 year drag, is unlikely to be a recession in G20 economies due to factors such as self sufficiency with low levels of specialisation, high government revenue’s with insignificant deficits and government spending gradually dropping whilst tax and export revenue’s see their hike as economic activity progresses. Yet government spending is yet to be under pressure till employment levels are increasing which is likely to be an solvable factor once economic activity surpasses that of the previous. Recessions on the other hand are highly likely in low developing nations which in my view are unlikely to see economic growth as of 2021 entirely due their high dependence on trade relations and dependence other other economies. Specialisation is likely to increase the major economic problem of scarcity leading to the extremely low availability of certain goods. The support of the UN, WBG and other allies if continual — economic development can aid in restoration of living standards.
Thus to sum up my interpretation of the future for 2021 — G20 economies unlikely to see a recession — economic growth to bring real GDP to it’s peaks by 2022 Q1 based on certain assumptions. Underdeveloped, 3rd world nation — likely to see recession — no economic growth due to low MNC presence and business activity — yet with aid playing it’s role economic development is anticipated.
Starting with Q1 in 2022, the 3rd world economies are likely to seek and develop their abilities to increase economic output and raise their GDP, however I believe the situation is highly unlikely to develop until trade deals are reformed. The inter trade deals between G20 and 3rd world nations is likely to reform mid or end of 2023 hence with our freeze date of Q4 of 2022, i believe the 3rd world nations are likely to see any peak on their real GDP however living standards could be progressive on the assumption of foreign aid. As of Q2 of 2022, the major economic issue being unemployment and low household income in the G20 economies, I believe a regressive trend could genuinely start peaking considering, corporate profits have reached 150% of that of Q1 of 2020 as firms are likely to start major operations such as increased economic activities, expansions and M&A once the behavioural economic player of ‘confidence’ is satisfied by testing their variance and survival.
Having predicted the economic conditions I would finally like to touch upon certain international relations as I believe that trade is an engine of growth and multi-nation collaboration is the best solution to the pandemic.
Nations such as the EU, USA , India and China are self sufficient economies however, I wish to temporarily isolate China due to other political factors. These 3 nations are likely to improvise trade agreements, considering Trump administration prolongs. If not, this could be a severe hurt in the Indian economy and the UK or Australia would be India’s one and only resort for collaboration. This would include reforming trade deals, improvising immigration laws and increasing short term borrowings for stability compensation. The current FDI by other nation for instance; Japans FDI on India (6 yrs) is likely to see a huge development for both nations and make a progressive benefit.
Nations such as Singapore, UK and NZ have already began major economic operations due to the current insignificance of the virus and it is highly probable for a much successful start even as of Q2 of 2021. Economic operations have begun and industries such as Financial Services and Consulting are their peak! These 3 nations are intact opening up employment and immigration opportunities, expecting a much effect economic growth soon. It is highly probable that UK restores it’s position in becoming the world biggest GDP replacing the United States. I believe these nations would be major players working with EU, USA and India which are to cope up after the catastrophic financial impacts. Once, the inter nation development within these G20 nations is successful which is likely by Q3 of 2022, I believe supporting nations on foreign aid and bringing new agreements would resume. Finally, considering China I believe the nation would run on a complete self sufficiency having disrupted it’s trade deals with all nations and the conflict of the nCOV-19 being a bio war which will be later dealt in the ICJ, China’s trade deals are likely to become much insignificant however progressive due to their influence on the global economy. After a 60% surpass of the Chinese economy by G20 nations, economic isolation is highly likely with 2 assumptions of China continuing it’s political rebates and G20 making a 60% surpass.
Ultimately, I wish to conclude that it is forming healthy relations that is to keep commercial activity on it’s progress and ultimately benefit the global economy, however the dynamics of economic structure and it’s influence on politics is what makes situations detrimental. A growth as stated in the Freidman theory, is certainly what would bring conditions to their norms!
