The 2019 Corona virus pandemic came with many shocks that dwindled economies, decreased employment, and greatly affected people’s livelihood. However, the shock was soon converted into surprise, with the markets bouncing back quickly. Especially in the stock market, the effects of the global pandemic were not as harsh as we had predicted. Even after most economies slipping into a recession with several sectors being killed, there has been a possibility of an upward trajectory for the markets in 2021 or the post-pandemic era.
The post-pandemic era: A likely bullish phase
With the markets coming back up and the stock market gaining its speed right after, 2021 seems to be a year that will unleash the growing market demand and fuel growth in many economies and sectors, especially the infrastructure sector and the green technology area. Consumer demand is also supposed to continue to grow in an upward direction with responsible corporate governance. A more sustainable and equitable future is likely for generations to come.
The most significant market factor in 2021 that will drive up the entire global economic scenario is going to be the re-engagement of the United States of America with the rest of the world under Biden’s presidency, as believed by the global head of thematic and sector investing for BlackRock, Evy Hambro. There has also been a general agreement between authorities that the ESG investment idea will play a significant role in influencing the boardroom decisions in 2021 in each organization, with a motive to lift the economy like never before. Every company that is going to take ESG seriously and adhere to the rules and regulations will be embraced, acknowledged, and encouraged by investors all around the globe.
Investing in social responsibly going to take a plunge
For the markets to continue emerging in the post-pandemic world, investors are putting a big emphasis on encouraging cultural shift and considering the demand for eco-friendly, sustainable, and pro-environment practices that are beyond the product itself and focus majorly on how the product is being sourced packaged, marketed processed, delivered and much more. Investors are confident that following a socially responsible approach will contribute massively to the growing and emerging markets of 2021.
Falling inflation: What is the cure?
The low interest rates in almost all economies of the world have raised some concerns with respect to inflation rearing. However, an energized economy is on its way with newer possibilities, innovations, and adoptions that are all set to fuel the right amount of inflation in the world economy to drive higher valuations. After all, each economy needs a bit of inflation to function and prosper in the right way.
Fabiana Fedeli, the global head of fundamental equities for Robeco, mentioned, “runaway inflation is not food for secondary markets, but some inflation in the equity market is actually good, and we believe that inflation will be quite benign over the year.”
The post-pandemic recovery with the emerging market is undoubtedly going to boom inflation to its natural levels.
The US and China relations and their impact on the global economy
The cut-throat competition between two of the largest and most robust economies in the world has always been a point of concern. However, with everything happening in and after the pandemic, the financial and economic experts believe that irrespective of which economy surpasses the other, the opportunities for smart investors are only going to increase, which will lead to a positive uptrend for the emerging markets in the post-pandemic era.
Quoting Evy Hambro again, he said, “everybody is anticipating that China will become the world’s largest economy, we all know it is going to happen, and the capital will follow in terms of investment decisions. We just need to be prepared for it and, hopefully, pick the right winners.” Several other experts agreed upon the growing strength of China, and a concern was also communicated to US president Biden to not force the European Union in choosing between the US and China like before, for the best of the two economies, especially the USA and the linked economies worldwide.
Conclusion
With the discussion of how the global economy is going to react in the post-pandemic era, China and the US have been the talk of the town for quite some time. It is advised for investors to take on all opportunities that come their way and for the economies to work in harmony. Only when several economies making up the world economy work hand in hand will we indeed be able to come out of the recessionary era that the global coronavirus pandemic has left us with.