Economic forecast: 5 events to watch in 2021

The year 2020 has been exceptional in many ways. On the macroeconomic level, a black swan has profoundly changed the landscape, leading to an unprecedented economic crisis linked to a pandemic and a succession of temporary and partial stoppages of the economy, the consequences of which have been largely mitigated by both monetary and budgetary support policies. The vaccination campaign that began in the last days of 2020 suggests that economic activity will return to a post-Covid level in 2021. An economic recovery should take place this year, albeit unevenly across sectors and geographical areas, but a recovery all the same.

However, because not everything revolves around the coronavirus pandemic, it seems crucial to us to identify the events that could influence the political, economic and financial landscape this year, in order to anticipate them as well as possible by imagining the most likely scenarios that will result. Of course, it is also appropriate to take the example of certain sectors that have not been affected by the crisis in order to try to orient one’ s activity in a similar way, adapted to his/her own activity. For example, the gambling and gaming sectors has not been negatively impacted by the crisis, quite the contrary. Indeed, many bookmakers have seen their subscription numbers soar. So, of course, not all companies are able to carry out their activity online, for lack of means or because their field of expertise does not correspond to this sales method. Nevertheless, 2021 augurs better. Find in this article 5 key dates in 2021 that will have major consequences on the macro-economy and therefore on your investments.

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1 JANUARY 2021 : NEW RELATIONS EXIST BETWEEN THE EUROPEAN UNION AND THE UNITED KINGDOM

The Brexit is registered. The Trade and Cooperation Agreement was signed on 30 December 2020 by the President of the European Commission, the President of the European Council, the British Prime Minister and approved by the British Parliament. However, it was not ratified until 2021 as its provisional entry into force is effective from 1 January 2021, the date on which the rules applicable to relations between the United Kingdom and the European Union will therefore be amended in a number of areas. While the last-minute agreement has prevented the reintroduction of customs duties and quotas for trade, the new rules are nevertheless more restrictive, even though the UK remains one of the EU’s main trading partners to this day. In spite of this, the consequences of Brexit, on the Eurozone economy in general and on the French economy in particular, should be relatively limited. 

6 AND 20 JANUARY 2021 : A NEW AMERICAN PRESIDENT SETTLES IN THE WHITE HOUSE

On January 6, the U.S. Congress is expected to approve Joe Biden as the 46th President of the United States and on January 20, the Biden administration is expected to take office. This change in the leadership of the United States should lead to an improvement in international trade due in particular to a pacification of the Sino-American trade conflict. In this context, investing in China seems particularly judicious. The country, which has been able to recover very quickly from the coronavirus crisis and whose stock markets are rather decorrelated from the major world stock market indices, should be “one of the first beneficiaries of the thaw in trade relations with the United States under the Biden administration”, as Stéphane Monier, Investment Director at Lombard Odier, points out.

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17 TO 20 MAY 2021: COP 15 AND 1 TO 12 NOVEMBER 2021: COP 26

From 17 to 30 May 2021, China will host the United Nations Conference on Biodiversity (COP 15). This major spring gathering will be followed in the autumn, from 1 to 12 November 2021, by COP 26, during which the United Kingdom will host the United Nations Climate Change Conference. The management company Candriam believes that “the pandemic has demonstrated that including long-term investment trends is useful in building a strong portfolio – environmental solutions, digitalisation and healthcare represent our strongest thematic convictions in this regard”. For its part, Allianz Global Investors believes that “the Covid-19 pandemic has reinforced the importance of sustainable investment: public-private partnerships, impact investing and alignment with UN Sustainable Development Goals can help investors make a real difference”.

JUNE AND JULY 2021: END OF THE FIRST MASS VACCINATION CAMPAIGN AND START OF THE ACCELERATION OF THE ECONOMIC RECOVERY

Vaccination campaigns, although they began across the globe at the end of 2020, will continue and intensify in 2021. The first mass vaccination campaign is expected to be completed in the spring or early summer of 2021 and Candriam is betting on a “rapid recovery in the third quarter”. This acceleration of the economic recovery should encourage investors to focus on investing in SMEs and value stocks, which could then begin to catch up with growth stocks. Allianz Global Investors points out: “If the pandemic is effectively brought under control in 2021, cyclical value stocks (notably industry and finance) should outperform. But if Covid-19 remains a major threat, the winners of 2020 (especially technology stocks) could be the winners of 2021”.

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24 OCTOBER 2021 : GERMAN ELECTIONS AND DEPARTURE OF CHANCELLOR ANGELA MERKEL

On 24 October 2020, the final deadline for the federal elections in Germany comes into effect, after which Chancellor Angela Merkel will step down. Germany will therefore turn the page on the Merkel era in the last quarter of 2021, shortly before France prepares for presidential elections in the spring of 2022. Political uncertainty, a major risk, will once again make its appearance on the European continent, and perhaps with it greater volatility in European equity markets. In addition, a change in Germany’s monetary policy, such as a premature tightening, cannot be excluded.

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