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By the end of 2020, a contraction of 3% to 6% expects the global economy. The economic reflections of the epidemic show that the unemployment levels e



COVID-19 has spread to more than 200 countries around the world. The world has surrendered to the virus, except for a few remote spots where there are no cases. The pandemic affected the global economy to an unprecedented extent for a century. Vaccine expectations and increasing cases, together with the increasing cases in winter, the ongoing shutdown measures are driving the global economy to the heaviest shrinkage to date.

By the end of 2020, a contraction of 3% to 6% expects the global economy. The economic reflections of the epidemic show that the unemployment levels experienced in the Great Depression of the 1930s will be exceeded.

Increasing poverty, increasing crime rates along with economic chaos, and the suffering of the poor population who cannot participate in digital education sufficiently will affect not only the next few years, but also the future of the generation Z. Coronavirus is pushing the world's future into an uncertainty that will cause unpredictable consequences.

Contraction in Global Trade

Global trade may also contract by the end of 2020, by 13% at best and 32% in the worst case scenario due to the possibility of a second wave, depending on the depth and extent of the global economic recession.

This situation will particularly harm developing economies. In the first 3 months of 2020, there was a 3% contraction in world trade and 18% in the second quarter.

The World Health Organization (WHO) first announced COVID-19 to the world as an infectious disease in January 2020. In the next few months, the spread of the epidemic to the world and the pandemic announced in March shook not only the health system, but the global economy of $ 90 trillion. The global public health crisis turned into an economic crisis after the slowdown in international trade, the closed factories and workplaces, and the social isolation measures taken.

In the first quarter alone, there was a sharp decline in international air cargo shipping, down 74% between January 5th and April 18th. As a result of the normalization process that started as of the end of May, compared to the figures in the first quarter, airline cargo transportation started to heal its wounds. International cargo transportation increased by 58% between April 18 and June 30 compared to the figure recorded on April 18, according to data obtained on June 30.

The contraction in maritime transport actually started before the epidemic hit Europe and the USA. China, the world's largest producer, is also in the top ten of the world's largest ports, with seven ports. As the starting point of the epidemic, the decrease in container transportation, which started as of February 2020, when the factories were first closed and shipments to the whole world began to decrease, continued with a sharp bottom until May. As of June 2020, we see that container transportation has started to increase.

Growth projections and Shrinkage

The business in container ports allows us to see the increase in export orders through indices. With the third quarter, which is seen as a recovery process, the numbers of seaway and air cargo transportation normalize, and the second wave of Covid-19, which will be experienced with seasonal influenza (flu) expected in autumn, may prevent trade again. Growth projections for 2020 for OECD countries are based on two scenarios. The red area of ​​the columns is the projected shrinkage rate based on the good-case scenario where the epidemic is under control and a second wave is not experienced. The burgundy part, on the other hand, represents the second wave of the pandemic, the extra shrinkage that will occur in case of an increase in cases.

It is predicted that Spain will be the economy that shrinks the most among OECD countries, and South Korea will be the least shrinking economy.

The expected shrinkage rate for the Spanish economy is -11.1% in the good case scenario and -14.4% in the bad case scenario.

The expected shrinkage for Korea is predicted to be -1.2% if the epidemic is brought under control, and -2.5% if things get worse.



What If Pandemic Continues?

Almost everyone has given up on 2020. Pedigree months of the year cases are increasing all over the world. So, will the Covid-19 outbreak end in 2021? Will Covid-19 vaccines, which have been rapidly approved in phase 3 yet, be effective? In addition to isolation, quarantine, social distance rules and vaccination studies, countries are looking for ways to stop the Covid-19 epidemic, albeit sometimes with different methods.

Our analysis on a global scale regarding the analysis of the current situation and the economy and health policies that will cover in 2021 is as follows:

• In countries with current account deficit and foreign debt, the crisis affects the markets much harder. Countries with rapidly growing budget deficits print money to keep the market afloat, but in the long run, this poses the risk of devaluation and high inflation.

• Funding citizens' care and protection efforts while providing financial support for national health systems under pressure to develop vaccines increases health expenditures around the world. For states offering free health insurance, financing difficulties will increase. In countries where there is no free health system, especially in the poor, the increase in cases and social unrest show that social events in these countries will increase by turning into demonstrations and violence.

• One of the methods to cope with the crisis is to support the credit markets with long-term and low-interest loans so that the companies with falling income and loss can continue their economic activities. Private companies in EU countries, where monetary and fiscal policies that help businesses under financial difficulties are implemented with grants and supports, at least do not increase their debt stock, but the prolongation of the pandemic process will push their limits in developed economies.

• Fiscal policies applied to stimulate economic activity may cause different consumer behavior, depending on the methods used. Bounced government checks offered to unemployed citizens in the US ensured the continuation of daily purchases and kept the fast-moving consumer goods markets alive, but consumer spending dropped as state aid cuts and unemployment figures continued to rise. In many countries of the world, people invest their current income and savings in commodities such as gold. Not only consumer spending, but also investments in areas such as participation in commercial activities, starting a business, and housing.

• Interventions by central banks and monetary authorities to stabilize markets jeopardize the ability of markets to fulfill their traditional pricing risk and capital allocation functions. Some states intervene in debt and corporate bond markets to guarantee liquidity.

• Problems in the health system and economy differ regionally, even within the same country. Apart from the national fiscal and monetary policies we are used to, intervention, incentives and assistance mechanisms should be developed in parallel with local developments regarding regional governments, local administrations, local companies and local businesses.

• Politicians, finance and commodity market executives are hopeful that the global economy will recover, starting in the third quarter of 2020, assuming there will be no second wave of infections. However, even if there is no new wave, the effects of the epidemic on global economic growth are expected to last until the end of 2021.

• It seems that the health crisis will not end without an effective vaccine. The economic crisis can last longer than most economists assume and with up and down charts, and politicians should develop long-term and reversible fiscal and monetary policies, taking into account the scenarios of the crisis's ups and downs.

• Additional measures may have to balance the competitive needs of households, wage earners, small businesses and large firms, local governments. Many countries may have to re-enforce social distance rules and various restrictions and close businesses that are starting to open due to an increase in newly confirmed COVID-19 cases.


World Commodity Trade Volume & Economic Growth 2021

In the light of current trade data for the second quarter of 2020, global economic predictions are made for the remaining half of the year by looking at the first half.

Due to the Covid 19 outbreak, strict social distancing measures and restrictions on travel and transport were in full force in most countries during April and May. With the month of June, relaxation started in Europe, Asia and the USA. Taken together, these developments are reflected in various economic indicators that suggest that trade may have bottomed out in the second quarter of 2020.

There are two scenarios for 2021. This scenario is based on the possibility of a second wave epidemic that may occur in the 3rd and 4th quarters of 2020, as well as the possibility of finding a vaccine that can be produced in the end of 2020 or the first half of 2021 and that can be produced worldwide.

According to the optimistic scenario, the epidemic will be under control in the second half of 2020 and treatment methods will be developed. The vaccine will be produced by the spring of 2021 at the latest, and the number of cases will drop rapidly. According to this scenario, the world economy will grow by 5% at the end of 2021.

 Economy Expectations 

According to the pessimistic scenario. The autumn of 2021 could experience a second wave in the developed countries of Europe, the USA and Asia. Vaccine studies may not be fruitful or a vaccine that is as effective and cheap as expected may not be developed. It should not be forgotten that for the revival of global trade, the treatment method to be found must be economical enough to be applied all over the world. According to the pessimistic scenario, the expectation at the end of 2021 is to come to a breakeven point, that is, the expectation of growth is zero.

In addition to the control of the epidemic and vaccination studies, the correct determination of monetary, fiscal and trade policies will play an important role in increasing the rate of recovery of the economy both on a national and global basis.

Expectations regarding the course of the global economy remain uncertain, not only for 2021 but also for 2022. The World Bank, OECD and IMF publish tables with data and forecasts on global trade and the downturn in GDP. The expectations of all these organizations about the course of the global economy have intersections with the predictions of the year-end and 2021 prepared by the WTO in the light of the first half of 2020 figures, but the negative expectations prevail.

The World Bank's latest forecast is that global production will decrease by 5.2% in 2020. This estimate averages the range on the chart prepared according to the WTO's optimistic and pessimistic forecasts. While trade projections remain roughly in line with the WTO's optimistic scenario, other international organizations' GDP estimates for 2020 are more pessimistic than WTO expectations.


Automotive Industry During the Pandemic Period:

Sales of consumer durables such as automobiles fell sharply in the first quarter of the year when the pandemic started to climb. Automotive factories were closed one after another in China in January 2020 and in the rest of the world in February March. With the opening of workplaces and loosening of isolation measures in May, recovery in automobile sales started.

Although methods such as working from home and distance education have become widespread, personal vehicle use and automobile sales have increased due to factors such as social distance rules, public transportation risk. Automobile sales in China fell 79% in February, with an increase of 5% year-on-year in May. Auto sales in Western Europe and the USA were still negative in May compared to 2021. In addition to the automotive sector, the increasing purchases of durable consumer goods are positive signals of the EU and US economy.

Home Work and Consumer Electronics Sales During the Pandemic Period

Consumer electronics sales have been better than expected so far, supporting the international trade of these products. For example, according to China's customs statistics, the country's exports of automatic computing machinery, including computers, increased 30% in April compared to the previous month.

During the pandemic process, the home working system has been in demand in many business branches. In particular, sectors such as the education system, banking, and communication have started to apply methods such as working from home and flexible working worldwide. This is the main reason for the increase in the sale of products for computer and information technology services that facilitate working from home.



usatradevisa: 2020 & 2021 WORLD ECONOMY FORECAST
By the end of 2020, a contraction of 3% to 6% expects the global economy. The economic reflections of the epidemic show that the unemployment levels e
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