As we enter a New Year – 2021 – what can we expect in the next 365 days that may significantly affect our lives? The typical New Year Greetings for 2021 will certainly need some serious tweaking!
What the world went through in the last nine months of 2020 was disastrous for all human life on this planet. That China triggered the pandemic is not a debate anymore. The fundamental and radical shifts that this pandemic brought about on earth for humans was drastically treacherous. Some serious re-calibrations have occurred. China, to me, will continue to be the fulcrum around which much of what is instore for us in 2021 may happen. What diseases will erupt in 2021 may well depend on what the Chinese are eating now.
As a new year dawns, the gravity of the pandemic as it continues to ravage the richer nations with an ageing population can perhaps be smothered by a basket of vaccines. Whether the virus and its mutations will be overpowered by the vaccines, we will perhaps know in another three months.
2021 as I look at it now, is full of unpredictable scenarios. The virus continues to play its stealthy games. There is uncertainty on the economic front everywhere with a patchy recovery. The geopolitics is irritable and can ignite an already volatile and unstable situation. Let us look at a few of the trouble spots.
Scramble for Vaccines. The scarcity of vaccines can trigger troubles of all sorts.
A yo-yo economy – rich-poor gap will widen and leave the poor further disadvantaged.
The fast-changing nature of the tech world with its now positive favourable effects on some parts of the economy – like online shopping – work-from-home (WFM) – distance learning, may all either remain or simply vanish, depending on how the virus behaves in 2021 and how effective will the vaccine be.
Tourism – Airlines – Hotels – Aircraft manufacturers will struggle.
Brick and mortar Universities may close. Consequences are complex with idling real estate.
Permanent job losses – the pandemic has done some lasting damage to certain jobs.
High inflations – after effect of enormous fiscal stimulus injected in 2020.
Trade war – unclear with huge Chinese trade surplus.
The looming China factor.
Already in the United States, reports indicate that the initial scarcity of the COVID -19 vaccines is showing signs of an emerging and thriving black market. Reports indicate that well-connected people and the wealthy can skim off a few doses here and there for friends, family or the highest bidder robbing the legitimate chances for frontline warriors like health workers, teachers, farm workers, firefighters etc. In India, I feel that many may not take the vaccine if the Gods (and the Rev Virus) continue to bless us with lower infections and deaths. Our death rate per million is in the lower three digits at 108 whereas some of the richer nations are in four digits ranging from 1,674 (Belgium) and USA (1,057). They certainly need the vaccine more than us! Economic calamities severely affect the poor disproportionately. Going by past pandemics, the toll on poorer and vulnerable segments of society will be worse. Economists believe that the pandemic will worsen income inequality severely impacting the low-skilled workers. The Global Hunger Index for 2020 has placed India at 94th amongst the 107 nations covered by the study. This ranking is shockingly worse than our neighbours – Sri Lanka (64th), Nepal (73rd), Bangladesh (75th), Myanmar(78th) & Pakistan at 88th position. 14% of India’s population is undernourished. The after-effects of this pandemic will be telling on this vulnerable section of India’s populace. States in India like Uttar Pradesh, Jharkhand, Madhya Pradesh, and Bihar will have to honestly do something dramatic and work harder to pull out more poor people out of the slippery slope of hunger and malnutrition. The pandemic prevented the usual smooth creative destruction of businesses. It wrecked the leisure industry while creating an unprecedent boom in the video streaming field. A McKinsey Report in May 2020 said, “Recent data show that we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks”. It seems that while recovery slowly resumes, digital laggards will be greatly denied opportunities. However, as more people become “cyborgs”1 the scale of dependence on some of the tech oligopolies is scary. This could trigger a tilt in the battle for power, perhaps political muscles destroying what may be considered dangerous innovations. (see below - what is happening now in China) I do not think either the Chinese or the Americans really intend to entirely decouple their two economies. Mr. Xi Jinping’s leadership speaking for all ethnic Chinese people – a whopping 30 million South East Asians of Chinese ancestry – and already controlling Cambodia & Lagos- can tilt the Vietnamese ambitions. Post COVID-19, Vietnam is promising to be an emerging economy with bright prospects. But the Chinese may put a spoke in the wheel and will not allow them to flourish. The Communist Party of Vietnam will have to deftly balance the public outrage of Chinese meddling and the reality of upsetting a powerful Chinese regime. The Chinese will continue to stir and churn the world while the now less potent US and the Western Europe may have lesser influence over them. On the contrary, the Chinese will continue to unleash their crafty, covert, and clandestine tricks on whoever comes in their way. I may not be surprised if they try and sabotage businesses migrating to India. Did they have anything to do with the recent incident in Bangalore? Australia too can face adversity in 2021. Australia has been lucky without a recession for the last more than twenty-five years. China has been a significant factor to Australia’s booming economy contributing almost 40% of their export to China, close to 1.4 million Chinese tourists and a large fee-paying Chinese students in Australia. Post the pandemic, the Chinese are not happy with them for a variety of reasons. The Australians perhaps now regret that they allowed them to play with their public institutions and think tanks. This can adversely affect Australia and its significant Indian migrant population there. For a very long period Chinese authorities have insisted on a “comprehensive Party building” in the private sector, including within foreign companies operating in China. Private companies are required to set up Party branches or Party cells. This is not done secretly. This is certainly done secretly in overseas Chinese enterprises. Jack Ma is in trouble. Who does not know China’s maverick entrepreneur Jack Ma. He has grown bigger and bigger and now the omnipotent Mr. Xi Jinping has reigned him in. He has clipped the wings of his online financial giant – the Ant Group. Chinese Communist Party has been warning Jac Ma against its growth in consumer loans and wealth management businesses. Recently the Chinese regulators abruptly suspended Ant’s $37 billion initial public offerings in Shanghai and Hong Kong. Even Jack Ma’s e-commerce conglomerate Alibaba Group Holding Ltd is under siege. Where did he go wrong – I think he grew too big and he talked openly and denounced the Chinese’s system of stifling innovation! See what I had said about “cyborgs”1 The epitome of globalization was its blind disrespect for borders. It brought sharper focus on certain nations and the consequent prosperity for the buyers and sellers who could participate in this trend. Such a global integration has been constantly challenged by the rise of economic nationalism and protectionism. And now this COVID-19 has exploded onto the scene accelerating the decline of rampant globalisation. So, what do we see happening in 2021. I think, many multi-national enterprises will try to operate as domestic businesses without the ability to reap the full economies of scale. Rules of capitalism could be shaken up. We now see a trend of gold mining companies becoming fashionable, probably because the governments world over has been pumping huge stimulus leading to inflation which in turn provides the right climate for bullions to thrive. As I write this article, Gold is at $1,899 per ounce. In the last six months, it had gained $123.52 per ounce and exactly a year ago, it had risen by $374.61 per ounce. Falling real estate prices are positive for gold. As a safe-haven asset, Gold should be in demand, but the US Dollar could steal the show. By August 7, 2020, gold reached a new all-time record of $2,062,50 an ounce. Will Japan return to deflation? Will interest rates stay low? What happens to Britain and the rest of the world when the New Year dawns? Will the virus return with its fury in India? I have no clue. Volatility triggered by the virus will result in both losers and winners. As the acceptance of and the comfort of WFM continues, certain industries like tourism and hospitality as well as airlines will continue to be hard hit and lose their momentum diminishing their rising prosperity. The comfort and acceptance of digital technologies may bring in a new symmetry which in turn could reduce people movement and it is unclear if we will ever return to the previous status quo. Cross border flow of data and professional services through remote forms of work can thrive thereby boosting the fortunes of tech enablers like Zoom, Teams, WebEx. But the unskilled and the poor who have no access to these channels will fall deeper into the ditches. So as the New Year dawns, open you purse strings and help the less fortunate and the deprived with your kindness and generosity. Respect the virus and remember SMS – Sanitizer- Mask – Social distancing. 1 By this I mean – increasingly the trend is that human minds and bodies are in a symbiotic relationship with machines.