As we enter 2021 with renewed hopes amid a COVID-19 vaccine being announced, Daniel Kibel, Co-Founder of CM Trading, discusses the possible economic outlook for 2021.
“2020 was a difficult year. And even with a COVID-19 vaccine on the horizon in 2021, a return to a degree of the normality we once knew is still probably a way off. Economists are speculating that global economic recovery may only truly begin in 2022 and possibly even 2023. With the vaccine being rolled out gradually and governments making decisions about who gets it first based on risk and exposure, there is still going to be social distancing in place for most of the year ahead. And some countries will have better access to the vaccine than others. So, we’re far from back to normal just yet.
“In terms of which economic sectors will recover first, airlines and tourism, which were hardest hit by COVID, will probably be among the first to pick up the pieces. Entertainment and events will take longer to gain momentum as social distancing continues. The global unemployment crisis is the elephant in the room that no one is talking about. Massive levels of unemployment around the world, due to thousands of small and medium businesses being forced to close their doors and larger businesses cutting costs drastically, is undoubtedly going to hamper economic recovery.
“The potential outlook for emerging markets like South Africa is precarious at best. South Africa was already facing economic difficulty before COVID-19. Mismanagement and corruption, along with Eskom’s troubles were serious sore points. And the pandemic has not helped matters. We can only hope that, post-COVID, the population’s energy will be pointed at repairing the crumbling economy. But South Africa’s road to recovery is likely to be a long one.
“For those trading in commodities in 2021, there are a few things to look out for. Oil is going to see a big shift over the next few years, with countries like the UK set to ban fossil fuel burning cars in 2030. Airlines, while on the road to recovery, are still unlikely to use as much fuel this year. Gold is generally a safe haven for investors. Generally when the world is in crisis, people buy gold. When crises lift, the gold price tends to go down. Gold is a very good indicator of the state of the world economy and always one to keep an eye on.
“There are bigger stories than Biden’s entry into the White House for US markets. The economic turndown, the rise in unemployment and the COVID crisis are far more pressing issues. How the COVID crisis is handled by US leadership will be the biggest influencer in how American markets perform this year. It’s difficult to know how global currencies will perform overall. But the dollar is generally a safe bet. I think it’s likely that the dollar will go up in months to come. And as Britain continues with Brexit, the Pound will probably fall.
“Overall, markets are set to move robustly in 2021. It’s a fascinating time in history. One of the most exciting things about being absorbed in the markets is seeing how they move the world we live in despite not really knowing what’s going to happen. I’d be amazed if the Rand doesn’t fall given the current state of the economy. Common sense says that the stock markets will go down as we are coming out of a pandemic. But that said, you might have thought that the markets would go down during the pandemic and not soar to unprecedented heights as they recently have. I think there is another ‘year unexpected’ ahead in 2021 and it’s a tough one to call. Whatever happens, it’s an interesting time to be alive.”
For more information on CM Trading, visit their official website at www.cmtrading.com or call +27105008026, and one of their friendly staff will assist you.
CM Trading is the brand name of Global Capital Markets Trading Ltd (A Seychelles company, company no. 104785)
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