One year on from the onset of the pandemic, and while the world certainly isn’t out of the COVID-19 woods just yet, we now have some cause for cautious optimism. Across the globe, vaccination drives are picking up steam – although it must be said that the success of said drives differ wildly from one country to the next. After a year of stop-start lockdowns, depressed wages, mass redundancies and vastly diminished economic activity, the global economy is now expected to grow by four percent in 2021, according to the latest predictions from the World Bank.
While this is positive news indeed, global economic recovery from the pandemic is set to be long, slow and highly dependent on a number of key factors, with curbing the spread of the virus and ensuring widespread deployment of the COVID-19 vaccine of course being at the top of the list. While too much has already sadly been lost – in terms of both lives and livelihoods – we may now be turning a corner on the fight against Coronavirus. Here, World Finance takes a look at the key factors that will impact global economic recovery in the 12 months to come.
1 – A successful, widespread vaccine roll-out
Unsurprisingly, the effective and widespread deployment of the COVID-19 vaccine had to be top of our list. Since the first Pfizer jab was administered in early December of last year, vaccine deployment has been steadily gaining momentum worldwide, although some countries are certainly outpacing others when it comes to the speed and strength of their vaccination programmes. Take Europe, for example: the UK has now vaccinated over half of its adult population, while just 14 percent of EU citizens have received the jab at the time of writing. While the vaccine will help to restore some semblance of normality, for global recovery to become more sure-footed, the jabs need to be deployed both rapidly and fairly around the world. In particular, low and lower-middle-income countries are at risk of a lack of access to vaccines, leaving them vulnerable to long-term economic damage as the world finds its feet post-pandemic.
2 – Supportive fiscal policy for businesses
For businesses of all sizes, the past 12 months have likely been the most challenging in recent history. As countries around the world have moved in and out of restrictive lockdowns, many businesses have found that their income has simply dried up; leaving them more or less dependent on government assistance in order to keep the wolves from the door in these testing times. From job retention schemes to business loans and protection from eviction, governments around the world have attempted to provide safety nets to those companies worst affected by the pandemic. In the EU, for example, France, Germany, Spain and Italy have committed to spending an additional $3.1trn on business support since the start of the pandemic. While this support has proved invaluable to many SMEs, for others, it hasn’t quite been enough to save them from the jaws of bankruptcy. If businesses are to stand a chance at bouncing back from the pandemic, then this generous, wide-reaching support will need to continue long into 2021.
3 – An end to stop-start lockdowns
Even with extensive government support, the stop-start nature of lockdowns around the world has posed a significant challenge to even the most innovative and forward-thinking of businesses. For many firms – particularly those operating in the arts, tourism and hospitality sectors – their entire business models are incompatible with a world restricted by lockdown measures and social-distancing requirements. Many businesses will require a return to ‘normality’ sooner rather than later if they are to survive, but as of now it is impossible to predict whether the current spate of lockdowns will indeed be the world’s last. Until countries are able to achieve and maintain low infection levels, then lockdowns may well remain on the cards for some time to come.
4 – Targeted support for those hardest hit
While the pandemic has affected every single one of us over the course of the past year, the COVID-19 recession has been felt much more acutely among certain groups than others. Indeed, the pandemic has served to exacerbate the inequalities already present in society, with the young and those on lower incomes bearing the brunt of the economic downturn. According to data from the Office for National Statistics, in the UK, 88 percent of the payrolled jobs lost over the course of the past year have been lost to under 35-year-olds, creating a looming youth unemployment crisis. Targeted support for these affected groups – such as the British government’s Kickstart job creation scheme for 16 to 24-year-olds on Universal Credit – will prove crucial in the months and years to come.
5 – Investment in future growth
As we now tentatively look to a post-pandemic future, governments around the world will need to shift their thinking from ‘survival mode’ to focusing on future economic growth. In the longer run, investments in high growth areas such as digital infrastructure and green energy could boost job creation and stand to future-proof economies around the world. According to PwC, there will be a renewed global shift towards embracing green infrastructure and fighting climate change in 2021, with the US, EU and China all set to prioritise green strategy over the course of the next year. According to the International Labour Organisation, a global move to a greener economy could create 24 million new jobs by 2040, meaning that investment in these areas could help to spur growth in the aftermath of the pandemic.