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2020 is likely to usher in a new era in human history that will define the concept of “disorder,” writes Deutsche Bank in a new study.
The 40-year era of globalization will be replaced by “an era of disorder,” according to a September poll by Deutsche Bank. The main characteristics of the new era will be the cold war between the United States and China, the increase in global debt and the strengthening of millennials. Correspondent.net says the details.
Not every disaster is bad
The world is on the brink of a new era, the initial period of which will be characterized by disorder and the weakening of globalization, according to a study by the largest German conglomerate Deutsche Bank, published on September 8.
The report says 2020 will usher in a new “structural supercycle” that will shape everything from the economy and asset prices to politics and people’s lifestyles.
The new era is not associated with the coronavirus pandemic, but the beginning of a new milestone in human history has been accelerated by a global epidemic. At the same time, it is noted that “not all disorders are bad.”
Eight key themes that will characterize the new era:
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deterioration in relations between the United States and the People’s Republic of China as the latter’s economic weight increases;
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a key moment in the development of the European Union: the pandemic has become a new impetus for integration processes, but there is the possibility that Europe will remain in a state of economic stagnation with the prospect of political fragmentation;
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greater increase in debt and diffusion of the policy of “helicopter money” as the main monetary flow;
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probable increase in inflation due to fiscal and monetary expansion;
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strengthening economic inequality at the beginning of the post-spear era, but in the future states will raise taxes for the rich;
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millennials and buzzers in ten years will be numerically equal to older generations and will be able to determine the outcome of democratic elections;
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growing global concern about climate problems;
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new technological revolution.
As for the Cold War, China could surpass the United States in GDP by 2030, the report says. As the gap between economies narrows, the “Thucydides trap” will grow.
This means the risk of a military conflict between two competing powers in the economy. According to Deutsche Bank estimates, in the last 500 years, 16 such situations have arisen and in 12 cases this has led to wars. Now a military conflict is unlikely, but an economic war is possible, German analysts concluded.
The confrontation between the two countries will gain momentum regardless of the outcome of the presidential elections in the United States and will look like a cold war between the Soviet Union and the United States.
An economic conflict will manifest itself as an increase in tariffs, penalties, asset blocking, technology transfer bans. As a result, this will lead to the formation of country blocs.
The technological revolution will come if the sky-high cost estimates of the tech giants prove to be valid. Option two: a repeat of the 2000 dot-com bubble. But in any case, the tech race of the major powers seems inevitable, says DB.
A report by Deutsche Bank describes the period 1980-2020 as the era with the best combined asset price growth with very high equity and bond yields across the board.
According to the bank’s experts, these trends are unlikely to continue in an era of disorder, especially in real terms. The experts concluded that in the next few years, “simply extrapolating past trends could be the biggest mistake you will make.”
What awaits the economy in the near future
An updated global macro forecast from renowned rating agency Fitch was released on September 7, suggesting that in 2021 global growth will generally offset the decline due to the COVID-19 epidemic.
But the devil is in the details: Despite the improvement in overall estimates amid a faster economic recovery from the crisis, only China can fully overcome the consequences of the recession.
On the other hand, estimates of the dynamics of the United States, Europe and developing countries have worsened due to the revision of the data on the fall of the second quarter.
World GDP will decline 4.4 percent in 2020. This forecast improves on the previous estimate in June (minus 4.6 percent).
“The pace of economic recovery after the record recession in March and April turned out to be higher than expected, although it will slow down in the near future,” the agency predicts.
However, in 2021, Fitch analysts now expect global growth of 5.2 percent, which means that the coronavirus slowdown will be offset by the global economy by the end of next year.
However, the United States will not reach the spring-like level of GDP until the end of next year, in the euro zone, until the end of 2022, but even this as long as there are no new lockdowns.
At the same time, the forecast calls for the EU and UK to switch to trade terms within the WTO early next year (instead of full-fledged duty-free trade).
For all developing countries (and this is Ukraine), excluding China, the forecast also worsens: from minus 4.7 percent to minus 5.7 percent.
Based on second-quarter results, global GDP fell by almost nine percent, and in many countries, by more than 20 percent (for example, India, Britain, and Spain) overall, in the first half of 2020. , the drop was 10 percent, according to Fitch.
Coronavirus is just one of the next pandemics
American experts warn that the 2020 pandemic may be just one episode in a series of massive outbreaks of viral diseases, which will occur with increasing frequency as humanity now enters the “era of pandemics,” Vice writes.
Anthony Fauci, a prominent American immunologist and director of the National Institute of Allergic and Infectious Diseases, and David Morens, an epidemiologist at that institute, predict that massive outbreaks of disease and epidemics will increase in the near future as the populations of the countries grow and communities expand. and the forests get smaller.
In an article published in August in the scientific journal Cell, Fauci and Morens note that “the last decade has been marked by an unprecedented increase in the number of pandemics,” including swine groups, the Zika virus and Ebola.
Scientists explain that while new infectious diseases have threatened people since the Neolithic Revolution more than ten millennia ago, when hunters and gatherers settled in villages, engaged in agriculture, and began raising livestock, during the last decade, scientists have seen a sharp increase in the number of novel coronavirus outbreaks.
James Gilkerson, professor of veterinary microbiology at the University of Melbourne, agrees that deadly new viruses await humanity.
“Although we have always faced epidemics, it is the sharp increase in the level of mobility of the population that has increased the risk. Combined with the destruction of the natural environment and the fact that people are increasingly expanding their space to live on the planet, these three factors together increase the probability of future pandemics. ” – he said.
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