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By 2020, the world’s economies have been rising and falling again and again at breakneck speed. How fast can it increase when mass vaccines go into effect in 2021?
The question may have been posed too early. The pandemic winter is not over. The first vaccine is expected to bring safety to the most sensitive elderly soon. It will save lives. But the collective effect is delayed.
Throughout the year they have The economic evaluations suffered from myopia. At first, the effects of the pandemic were fatally underestimated. When stock markets crashed, a black hole of pessimism emerged, which soon after turned to illusions as the infection subsided over the summer.
The prevailing view at this time is that the second wave of infection will be financially manageable. That’s what it really looks like now. Till the date. But even that can turn into a mirage. In the short term, the economic outlook is uncertain, especially given the new strain of the British virus.
But a little later there is still tangible hope. If vaccination plans are decent and new virus strains can be controlled until summer, economic recovery is within reach.
Three factors suggest that you can go faster, faster than many forecasters think.
A first sign in it is the taste of the normalization that we got at the end of the summer. Then growth rebounded in a way that exceeded all expectations. Before long, the Swedish economy recovered more than half of the spring loss.
Unemployment, which most observers thought would continue to rise through the fall and winter, fell in August. Since then, it has continued to decline.
This does not only apply to Sweden. The French economy recovered and grew by almost 19 percent during the third quarter of this year. He recovered four fifths of the spring race.
The economies have thus shown unexpected resistance. This distinguishes the pandemic crisis from, for example, the financial crisis, which never led to the same fast race, but became more tenacious. If you had to choose between the two: a short, shaky download or tangled system problems that take time to resolve, the quick process is the least bad.
A second factor that The suggestion that the recovery will go well is that the pandemic crisis has affected comparatively resilient industries and regions.
Big cities and especially Stockholm have had the worst so far. Hotels and restaurants stand out the most, while the industry is doing well.
This trend is the opposite of previous recessions, which have typically affected investments, the construction industry, manufacturing, and regions that rely more on heavy industry.
The hotel and restaurant industry is probably the easiest to get up. Sharp pitches between stations are among the conditions there. Even in a normal year, many companies remove the sign, and even more those that open their doors for the first time. Start-up is almost double that of manufacturing companies.
It may also be that big cities take shocks better than other places. If you had to choose again, between ditching your job in Stockholm or Sandviken, the capital would probably be preferable. There is a greater role for the labor market in large cities. At least it is easy to find a suitable education while waiting for better times.
A third factor has to do with the fact that the very root of the economic crisis, the sars-cov19 virus and the terrible disease it can cause, can be overcome. At least up to a point.
It is true that both the WHO and the Swedish Public Health Agency warn that some measures against the pandemic will have to remain in force for some time. That’s enough.
But as the National Institute for Economic Research recently stated in an in-depth analysis of pandemic efforts, not all contagion measures are hitting the economy hard. We can continue to wash our hands, stay home for symptoms, test and detect infections, and avoid the most dangerous congestion without significantly affecting the economy.
The virus does not need to be completely eradicated for life to return to normal. The day we can do both everyday and festive things without feeling fear of viruses or a bad corona conscience, the relief will also be great.
This distinguishes the pandemic crisis from other troublesome recessions. When did the crisis of the 1990s, or the financial crisis, really end? There were some turning points that can be seen in the rear view mirror, but never a resolution that was noticeable at the time.
The most interesting of next year The phenomenon to look at becomes, therefore, our behavior, and the response of the economy, when the feeling of liberation begins to appear. There is no good parallel in modern history. Nothing to rely on a growth forecast.
But it can be speculated that it will be a proper injection when all the postponed plans and suppressed needs can be realized again. When that happens, hopefully the homes will be ready too.
Savings during the pandemic have been high. During the first three quarters of the year, Swedes have deposited twice as much money into their bank accounts as usual. A minor part of this is due to the fact that many sold stocks and funds during the spring. But a lot is new money that has been saved a lot and can be spent quickly.
The fact that both stock markets and house prices have remained high so far may also add more energy to the celebration. Crashes in the equity and housing markets are otherwise an additional inconvenience during recessions. Many feel poorer and behave more cautiously, reducing the economy. We can avoid that now.
Like the vaccine If there is no miracle cure, there probably won’t be an inexpensive fairyland coming next year either. Most evaluators have taken note of the experiences of historic recessions: they generally have long-lasting consequences for the economy and people.
Of course, the normality to which the economy can return was also flawed. Unemployment in Sweden was high even before the pandemic. And the gaps in the labor market have barely narrowed in the last year.
After the pandemic, there is also the risk of a financial hangover. Many affected companies that have survived will be deeply in debt. This also applies to many states, to a lesser extent the Swedes.
The great dilemma for The world’s finance ministers will be: When should pure crisis measures be withdrawn and what kind of support do economies need afterwards? After the financial crisis, many learned that stimulus should not be withdrawn too soon.
The fact that this bug is so fresh in memory also indicates that the policy will provide better support and pave the way for a stronger recovery, in 2021 and beyond.
