In my humble opinion predicting the future is not an easy task and I discovered at an early age that crystal balls seldom work.
A year ago, I would not have thought that I would be wearing a face mask to go to the grocery store, spending a socially distant holiday season and celebrating New Year's Eve through Zoom or Facetime. Predicting the future, no matter how much data out there, is difficult .
The global approval and subsequent roll out of COVID 19 vaccines is the beginning of controlling the pandemic. The sun is peeking out from behind the clouds, there is light at the end of the tunnel and economic recovery lies ahead.
The unparalleled GDP contraction globally has been one of the worst for most economies in human history. The IMF is projecting that the national output for developed and emerging economies will contract, with the possible exception of China, which showed early signs of improvement and modest growth.
The speed of the recovery is a difficult question to answer because of the differences within the economic zones.
Forbes and other analysts are predicting a -4.7% contraction for developed economies (except China) and a staggering -8.1% for emerging economies.
We can expect Central Banks to position their policies towards a prolonged recovery by keeping interest rates very low for the foreseeable future, at least for a year or more. Most countries are forced to promote fiscal policies that encourage growth to prevent the output losses from becoming permanent and to avoid the death spiral of their economies. The limitation in borrowing of some economies will have an impact on the timing of the recovery and become the key driver between advanced and emerging economies. Developed economies will be able to borrow at incredibly low interest rates, while developing countries have less capacity to use fiscal policies to begin the recovery process.
We can safely state, based on 101 FX, the following:
In the face of uncertainty with a new US presidency, global turmoil, aggressive economic actions and their future impact, and a hyperinflated stock market, we should keep our plans and focus short term and be ready to take advantage of opportunities whenever we can in this volatile environment.
With all this in mind, success will smile to those who dare and never forget to:
Let's make 2021 a year we can never forget. Success smiles to those who dare. Rock on!
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