Summary:
EconVue experts share their predictions for the coming year.
Robert Shapiro EXPERT
Here are some thoughts. In six months, President Biden will likely have earned much wider and deeper national support than seems possible today. On taking office, he will roll out a national strategy for rapid mass vaccinations; restore pre-Trump environmental, health care and anti-discrimination regulations; and rejoin the Paris Accords. Further, his first reconciliation act proposed by February will include $1.9 trillion in benefits for individuals, state and local governments, and businesses – all necessary to lay a foundation for economic recovery This agenda will be enacted with little or no Republican support – and if they succeed, the economy will reopen by Autumn, growth will accelerate, and Joe Biden will be the president who gets the public’s business done.
That success could increase the odds of progress on his domestic agenda – infrastructure, immigration reform, college tuition support, and a plan to finally approach universal access to healthcare. All are forms of public investment that should raise productivity and growth over the long run. For their part, the Republicans in Congress will likely be absorbed in a free-for-all battle between the establishment conservative wing and dedicated right-wing populists. Their main point of agreement will be opposition to President Biden’s agenda – and if his early measures lead to a strong recovery, that could deepen their divisions, alienate independents, and give the Biden administration an open lane to make the gains in the midterms necessary to enact parts of that agenda.
R. Evan Ellis EXPERT
Latin America and the Caribbean will continue to struggle in 2021 with uneven performances, reinforcing health, economic, fiscal, and political challenges, and the prospect for multiple serious crises. Multiple Covid-19 strains will continue to overwhelm health systems, with spread accelerated by delays in widespread vaccination in most countries until at least 2022, limited social distancing due to large informal sectors, limits on government fiscal ability to compensate individuals and businesses, limited respect for government mandates and the ability to enforce them, and downplay of the threat by leaders in Brazil, Mexico and elsewhere.
Increasing economic need combined with actual and de fact relaxation of social distancing controls will lead to rising street crime, while the continued distraction of security forces to the pandemic response will create opportunities for gangs and other organized criminal groups to expand control. The combination of increasing economic need, vaccine delays, budget cuts in non-Covid-19 areas, and evidence of public corruption and inefficiency in the pandemic response will fuel increasing social discontent, already seen from Guatemala and El Salvador to Haiti to Chile. The left will consolidate control amidst chaos, including in Argentina, Bolivia, Venezuela, Nicaragua, and Mexico, and will have important opportunities to come to power through elections in Ecuador (February) and Peru (May). China will play an increasingly important role in financing those and other regimes, and expanding its commercial presence through M&A, accelerating in the second half of the year.
The Biden administration in the US will likely be limited in its ability to fund new initiatives for the Northern Triangle, Caribbean and elsewhere, by pushback from the Latin American left, fights with particular regimes over corruption and human rights issues, and by continuing domestic political distractions, although the overall tone of US-Latin American relations, and associated press coverage, will likely improve.
Robert Pringle EXPERT
- The abuse of money will continue - and that’s official.
- In other words, whatever the intentions may be, the effect of policies will be to benefit mainly private interests.
- These will include as always the already-wealthy and already-powerful.
- The official purpose will be to support employment and small and medium sized enterprises in the recovery.
- But this requires also healthy and dynamic banking sectors, which are nowhere to be seen.
- Banks will struggle to remain profitable under regimes of low to negative official interest rates and loan yields.
- Europe with its bank-centric financial system will suffer more than the United States.
- With market signals misfiring, governments will require central banks to allocate credit to priority sectors.
- Priority sectors will be those with political clout.
- The vast rise in corruption and criminality resulting from international Covid-related aid will become apparent.
- Joseph Biden and Kamala Harris will preside over a golden age of global crony capitalism.
- Smart guys everywhere will make more money out of politics than by running businesses to serve customers.
- They will call this “stakeholder capitalism” and trumpet its superiority over bad old shareholder capitalism.
- The Roaring Twenties will end not with a bang but with a whimper.
Comments
In Europe, we expect to see the same trends as in the US, with the exception of the UK, which will suffer from the difficult disengagement from Europe.
While the US economic recovers, we are likely to see a more bumpy ride for the global economy, especially in major emerging markets, largely because of problems in the vaccination campaigns.