2020 will be remembered as a truly extraordinary year for the global economy and society. At the beginning of the year, there was a widely-held sense of optimism that 2020 would be a better year, following a challenging 2019. For full article click Jim Power 2021 A New Dawn
This sense of optimism was based on a belief that a ‘hard Brexit’ would be avoided at the end of January; and that ahead of the US presidential election in November, President Trump would seek to soften his approach to China, and lessen the possibility of a very damaging all-out trade war between the US and China.
By the middle of February, both of those prognostications were looking valid. A ‘hard Brexit’ was avoided, as the UK left the EU on 31st January and then entered into an 11-month transition period. Furthermore, the US and China adopted a more conciliatory approach to each other and we witnessed some drawback from the trade dispute that had caused so much fear, uncertainty and disruption in 2019.
However, any positive impact from those developments was quickly swept away as the novel coronavirus, COVID-19, first took hold in China and then spread with rapid ferocity across the world. From the moment that COVID-19 was declared a global pandemic in early March, most countries around the world were subjected to varying levels of lockdown and restriction, and this arguably created the most severe economic and humanitarian crisis since the second world war. Unfortunately, as we enter 2021, this crisis is ongoing.
The economic performance of different countries in 2020 was heavily driven by the path of the virus; the structure of the economy, with those countries with a heavy dependence on tourism most adversely affected; and the manner in which the authorities restricted economic and social activity.
The year ahead
Looking ahead to 2021, it is possible to be optimistic, subject of course to all of the same caveats about the mutating virus and the vaccines. The very stringent
restrictions in place in January, which could last well into the first quarter, will obviously have a very significant impact on economic activity. There is not a lot that can be done about that. It is necessary to bring infection levels down, but Government will have to continue to provide strong financial support to households and businesses for the foreseeable future. The hope is that an effective vaccine programme will be rolled out as quickly and efficiently as possible, and restore some semblance of normality to the economy and society in the second half of the year.