2020 is not over yet, but it has been a year like no other. The pandemic generated massive economic losses – not to mention the lives lost around the globe. A true tragedy.
In the eyes of many, the trading year will end in November, so with just days left, the focus shifts to two things for investors. One is to preserve what has been made so far. Typically, December is a month when the trading activity declines significantly.
Not that traders are not active anymore, but no one takes chances as, say, in May. The reason for that is that often the market spends a lot of time in consolidations, and no one wants to be trapped in a position during the holiday season.
Another thing that happens this time of the year is the preparation for the upcoming one. What trends lie ahead? Did something change in the year that passed that has ripple effects into next year?
2021 Trends to Consider
We must start with inflation as it has been on everyone’s mind this year. Both central banks and governments engaged in easing policies – monetary and fiscal. However, the effects of such policies take time to be reflected in the real economy, several months, or even more. As such, one of the major themes to keep an eye on next year is inflation and inflation expectations.
While money printing suggests inflation is on the horizon, it may not be the case in the next twelve months or so. The longer the pandemic lasts, the longer the inflation remains at lower levels. Therefore, the chances are that next year, disinflation or even accentuated deflation are the norms.
Remote work is here to stay. Even with the end of the pandemic in sight, employees and employers both saw the benefits of remote work – employers save on office rent, employees on time, and costs related to commuting.
As a result, education will likely be on the rise too. More precisely, self-education or lifelong education. The pandemic brought to light qualities in an employee that were underappreciated before. Think of empathy, an adaptable workforce, the ability to motivate others and perform in a virtual environment.
Regionalization will likely prevail. While globalization will not disappear, it will shrink some more. As a result, going “local” instead of “global” changes everything both for large and small businesses.
The state role grows within a country, while one nation’s international influence declines. Also, regional trade agreements will dominate international ones. The recent birth of RCEP in Asia (Regional Comprehensive Economic Partnership) is the last sign of regional isolationism.
All in all, the way out of the pandemic does not mean a return to normal. The new normal may look safe in terms of safety to travel and meet other people. However, the new economic normal will not resemble pre-crisis conditions anytime soon.