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Forecasting the world in 2021



A global pandemic was not on FT forecasters’ radar screen — or anyone else’s — one year ago. But it proved, tragically, the defining event of 2020, and will dominate 2021. By pushing the US into recession and sending carbon dioxide emissions tumbling, it confounded two of our more confident forecasts — and only 18 per cent of readers in our online contest predicted these correctly.

UK-EU trade negotiations left everyone guessing to the last, but the late agreement reduced our blushes, meaning we got only five answers wrong — still worse than four the year before. Angela Merkel’s grand coalition did not collapse, Matteo Salvini didn’t return to power in Italy, and Britain’s Labour party beat our expectations in making itself electable. 

The top-scoring readers however, beat our total for a fourth year running. Three tied on 18 correct answers, and the absence of the Tokyo Olympics rendered our tiebreaker moot. Well done to Ravi Chachra of Mumbai, Ulrich Hege of Toulouse, and Daniel Maag of Singapore. Try to beat the FT in 2021 by providing your answers to the 20 questions and tiebreaker below, plus your real name and email. A happy, and healthy, new year. Neil Buckley

FT readers: submit your predictions for 2021

Will the WHO call an end to the public health emergency over Covid-19?

No. The World Health Organization called a Public Health Emergency of International Concern, its highest level of alarm, on January 30 when there were fewer than 100 Covid-19 cases and no deaths outside China. It would be an extraordinary triumph for science, medicine and global politics if the PHEIC were declared over before the end of 2021. Everything would have to go right, from vaccination campaigns to continued social distancing measures. Covid-19 deaths are now running at about 10,000 per day. The toll is almost certain to be much lower by December but not low enough for the pandemic officially to be over. Clive Cookson

Will the majority of the world’s 5bn adult population be vaccinated?

No. While governments and health leaders are seized with the knowledge that only the successful global rollout of the vaccine will halt the spread of Covid-19, the extent of coverage looks set to become yet another point of division between rich and poor countries. Efforts are under way to close the gap. Covax, the global initiative for equitable access to immunisation, has agreements in place to secure almost 2bn doses. But logistical difficulties and probable funding shortfalls mean some needy nations will struggle to implement mass inoculation programmes. Even in the UK and US, vaccine hesitancy — a key issue for 2021 — will blunt the effort to ensure a large majority of citizens is protected. Sarah Neville

Will the Conservatives under Boris Johnson re-establish a clear lead over Labour?

No. Labour under Keir Starmer’s “new management” is showing gains in every age group and with both sexes. But it will not be easy for the opposition to embed a clear lead either, unless UK voters believe negative effects both of the Brexit outcome and of the pandemic are the government’s fault. Pundits and pollsters debate this — there is a suspicion that, despite all the incompetence, the Covid challenge is seen as one that would have confounded any prime minister. Local and mayoral elections in May will test whether the public’s patience has run out. Miranda Green

Will there be an independence referendum in Scotland?

No, not next year. But there will be a constitutional crisis, if as is likely, the Scottish National party wins a majority in the Scottish parliamentary elections, fuelling demands for a new vote. Only Westminster can grant a legal poll and Boris Johnson will refuse at first. Given the desire to rejoin the EU, SNP leader Nicola Sturgeon is resisting demands to hold an illegal poll so one of the big stories of 2021 will be her efforts to ratchet up the political pressure for a new vote in the next two to three years. Robert Shrimsley

Will the Greens be in Germany’s next governing coalition?

Yes. No coalition after federal elections on September 26 is plausible without the Greens. A tie-up with the left might be more comfortable, but they will fall short of a majority. So the now centrist Greens, with charismatic co-leader Robert Habeck, will team up with the Christian Democrats. The CDU will soon have to make do without its popular chancellor Angela Merkel, who steps down at the election. It will choose Armin Laschet as next party leader. But when his ratings slide, it will back the more compelling and Green-friendly Bavarian premier Markus Söder to lead the centre-right campaign. Ben Hall

Will Brussels charge a country with rule of law breaches in the use of EU funds?

No. The European Commission first needs to outline guidelines on how to trigger the new provision in the EU budget, which allows it to cut or freeze funds if rule-of-law breaches “directly” affect the use of the money. It will not apply the mechanism until the European Court of Justice has ruled on its legality. Some hope the court could fast-track its decision if it is a matter of urgency. However, a ruling will probably take several months to over a year to materialise. This would give Viktor Orban, Hungary’s illiberal prime minister — and primary target of the rule of law provision — ample time to concoct a defence ahead of national parliamentary elections in 2022. Anne-Sylvaine Chassany

Will Joe Biden be a lame duck president?

No. Mr Biden will find it hard to get big reforms past a Republican-controlled Senate. But he will have plenty of leeway to act in foreign policy and via executive action, such as rejoining the Paris deal on climate change, ending construction of the US-Mexico wall and creating a coherent federal policy to tackle the Covid pandemic. If he is lucky he will peel off a couple of Republican votes that he would need to push through the $2tn economic stimulus to “build back better”. But don’t count on it. Ed Luce

Will the US and China reach a trade deal?

No. While the world will see a much more conciliatory tone between the incoming Biden administration and Beijing, none of the fundamental issues between the two countries — from WTO violations to labour and environmental standards to the rules for Big Tech and the digital economy — are likely to be resolved. Mr Biden cannot afford to look soft on the Middle Kingdom for fear of losing swing state support before midterm elections. And China, under President Xi Jinping, has announced it wants to be independent of US technology and supply chains by 2035. The “one world, two systems” problem will prevail. Rana Foroohar

Will large-scale demonstrations erupt again in Hong Kong against China’s authority?

No. China’s imposition of the national security law this year has changed the calculus of would-be demonstrators in Hong Kong. Sporadic protests at Beijing’s toughened regime in the territory may erupt from time to time in 2021, but it is hard to imagine these becoming large and sustained. The new law criminalises acts of “secession, subversion, terrorism and collusion” and provides for sentences of up to life imprisonment. Police are also much quicker to pounce on any sign of unrest. James Kynge

Will India’s economy return to its pre-Covid size?

Yes. India was hit hard by a stringent coronavirus lockdown. Its gross domestic product suffered a historic 24 per cent contraction year on year in the April to June quarter. The economy is estimated to have contracted by as much as 9 per cent in 2020, but is forecast to recover those losses and grow by about 10 per cent next year. The recovery, however, has been accompanied by tremendous dislocation, with larger, better-capitalised companies gaining market share at the expense of mom-and-pop businesses. Despite strong headline numbers, many households and small businesses will still be struggling, a probable drag on longer-term growth. Amy Kazmin

Will Nicolás Maduro hold on to power in Venezuela?

Yes. Despite leading his country into one of the world’s worst economic crises ever seen in peacetime, with GDP contracting 75 per cent in five years, Mr Maduro has tightened his grip by taking control of Venezuela’s parliament in a rigged election. Opposition leader Juan Guaidó has lost credibility after failing to dislodge Mr Maduro and no longer presents a serious threat. With Venezuela’s international backers — Russia, China, Iran and Cuba — solidly behind Mr Maduro, his only real worry is a palace coup. That is why he has a large and well-trained team of Cuban bodyguards. Michael Stott

Will the US rejoin the 2015 Iran nuclear deal?

Yes. President-elect Joe Biden says Washington will rejoin the accord if Iran returns to “full compliance”. Hassan Rouhani, Iran’s president, says Tehran will reduce its nuclear activity in-line with the accord if US sanctions are lifted. Both have political motivation to make it happen. Mr Rouhani was an architect of the deal and its fate will determine his legacy. Many in Mr Biden’s team negotiated the accord and will want to reverse Donald Trump’s decision to abandon it. But there are many potential stumbling blocks. And if a hardliner wins Iran’s June presidential election — as expected — it would be even more complicated. Andrew England

Will Ethiopia’s Abiy Ahmed be re-elected?

Yes, but it will be touch and go. Abiy Ahmed has pledged to hold elections in 2021. An argument over postponement because of Covid sparked a rupture with the Tigray People’s Liberation Front, which had dominated for 27 years and fashioned two decades of near double-digit growth. Mr Abiy sent troops into Tigray to quell rebellion, but now faces discontent from other regions seeking greater autonomy. Memories of the prime minister’s 2019 Nobel Peace Prize and initial adulation are fading. But odds are he will survive and press on with his vision of a liberal economy and unitary state. David Pilling

Will US boardrooms become much less white?

No. America’s racial reckoning spread to its boardrooms this year, as campaigners told directors who pledged to do more to address the country’s inequities to look in the mirror. Just 12.5 per cent of Russell 3000 directors come from under-represented ethnic and racial groups, according to Institutional Shareholder Services — a fraction of the 40 per cent of Americans who count as ethnic minorities. Nasdaq, California and several investors are now pressing for greater diversity. Could the figure rise to 15 per cent in 2021? Don’t hold your breath. Change will be faster than before but slower than many hope. Andrew Edgecliffe-Johnson

Will 2021 be a turning point for electric cars?

Yes. There have been false dawns, with sales of electric vehicles in China surging and falling along with subsidies. But EVs have broken through in Germany and Scandinavia as diesel fades. Morgan Stanley predicts global EV sales will rise by more than 50 per cent in 2021. This will happen, with sales nearing 5 per cent of the total from the International Energy Agency’s estimate of 3.2 per cent in 2020. John Gapper

Will the combined stock market value of the five biggest US tech companies top $8tn?

Yes. After their combined value more than doubled in two years, to $7tn, and with regulators circling, this might seem to be the time to move out of Big Tech. But the five — Apple, Microsoft, Amazon, Alphabet and Facebook — have ridden out the crisis in better shape than most. Amazon’s Jeff Bezos has seen his fortune swell. The additional $160bn in combined revenues the five are expected to generate next year, or an increase of 13 per cent, will shine as the world struggles to get past the pandemic. With a surplus of cash looking for a home, such assured growth at scale will be hard for investors to resist. Richard Waters

Will more than half of European office workers be back in the office?

Yes. Many office drones liked working from home in lockdown but for those in cramped housing, or with home-schooling obligations, life was not so rosy. Morgan Stanley’s regular surveys of workers in five European countries indicated 28 to 30 per cent of office staff did not work from home at all after the summer. A further 11 to 14 per cent did not want to in future. A majority of staff want to work at least one day a week from home — and they should have that choice — but, with vaccines available, at least half will return to the office for more than two days out of five. A few may even learn to enjoy it again. Andrew Hill

Will the S&P 500 finish above 4,000?

Yes. The global benchmark of investors’ confidence had a great run in 2020, thanks to the largesse of central banks and governments, wrapping up the year with a gain of about 15 per cent. The rollout of vaccines means stocks that had not recovered so well since March — think energy and financials — have scope to catch up, while it is hard to imagine a serious hit to the star tech performers. That makes a 9 per cent gain from current levels sound achievable. The main risks are inflation that pushes up bond yields, premature signalling from policymakers that support could be withdrawn, or a serious regulatory hit on tech. Katie Martin

Will global carbon emissions return to pre-pandemic levels?

Yes. Emissions plunged by an estimated 7 per cent in 2020 after Covid-19 sent the global economy into a coma, the biggest annual fall since the second world war. But daily emissions are already edging back to what they were in late 2019, not least in China, which accounts for more than a quarter of global emissions. The EU wants a green recovery but the stimulus plans in other large economies are still skewed towards fossil-fuelled sectors. This suggests emissions will rebound as they did after the 2008 financial crisis, despite the pledges countries make in the run-up to November’s COP26 UN climate summit in Glasgow. Pilita Clark

Will oil prices stay above $50 a barrel?

Yes. The oil market has been given a boost amid the rollout of mass vaccination programmes. But after months of lockdowns and travel bans that collapsed consumption and prices, can this optimism hold? As the global economy rebounds, consumption will pick up. This may offset any additional barrels coming from Opec, Russia and allied partners, which enacted record production cuts. Their alliance is looking fragile, but the worst of all scenarios would be any plan to unleash millions of barrels unchecked. Keen to avoid another plunge in prices, it is more likely that any tapering will match any demand rebound. Anjli Raval

Tiebreaker: What will Tesla’s market value be at the year-end?

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Emerging Markets

Regulators close ranks on crypto




This article is an on-site version of our #techFT newsletter. Sign up here to get the complete newsletter sent straight to your inbox every weekday

Regulators are continuing to step up their scrutiny of cryptocurrencies, with central banks and South Korea’s tax authorities demonstrating fresh concerns.

In a report published on Wednesday, the Bank for International Settlements, the global body for central banks, argues that digital tokens such as bitcoin have few redeeming features and “work against the public good”. It also dismissed stablecoins — a link between crypto and conventional assets — as an “appendage” to traditional money.

Perhaps unsurprisingly, the BIS did endorse the development of digital currencies backed by central banks, saying they could be a tool to achieve greater financial inclusion and lower the high costs of payments. “Central bank digital currencies . . . offer in digital form the unique advantages of central bank money: settlement finality, liquidity and integrity,” it said.

In contrast, bitcoin wasted energy and cryptocurrencies were “speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes”.

South Korea has acted against the financial crime of tax evasion, with more than Won53bn ($47m) of bitcoin, ethereum and other cryptoassets confiscated from 12,000 people. Officials said it was the largest “cryptocurrency seizure for back taxes in Korean history” and noted that local exchanges had allegedly been used to conceal assets because they did not collect the resident registration numbers of account holders. Many of South Korea’s 60 crypto exchanges are battling to meet regulatory conditions to operate beyond September.

This week’s #techAsia newsletter asks whether the death knell is being sounded for cryptocurrencies. That could be the case in China, where it is scaling up tests of its official digital renminbi, and appears serious about stamping out the crypto industry on its soil. Bitcoin fell below $30,000 on Tuesday following the latest regulatory crackdown, but it has recovered to be worth more than $34,000 today.

The Internet of (Five) Things

1. Migrant workers locked up in Taiwan
With Taiwan under pressure to increase manufacturing output to ease global shortages, particularly of semiconductors, electronics groups including Japan’s Canon and Innolux, an affiliate of Apple supplier Foxconn, have been accused of locking up migrant workers amid an outbreak of Covid-19. Some companies have forbidden migrant workers from leaving the dormitories where they live except to go to work.

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#techFT brings you news, comment and analysis on the big companies, technologies and issues shaping this fastest moving of sectors from specialists based around the world. Click here to get #techFT in your inbox.

2. SoftBank not a ‘one-man show’, says Son
Masayoshi Son has told shareholders that SoftBank will not prioritise short-term trading gains as the company behind the world’s most aggressive technology fund was grilled over governance failures after the collapses of Greensill and Katerra. At its annual shareholder meeting, the 63-year-old billionaire founder defended the Japanese conglomerate’s governance structure, saying the board was not “Masayoshi Son’s one-man show”.

3. Toshiba’s ’dark arts’ and dirty tricks
Today’s Big Read sets the stage for Japan’s most contentious annual shareholder meeting in decades. At its centre is the fate of Osamu Nagayama, the widely respected chair of Toshiba who faces being swept away by a mass shareholder revolt that could — in a single vote on Friday — sack the entire board of one of Japan’s most famous industrial names.

4. ‘Amazon effect’ hits US wages
Companies struggling to find workers as the US economy reopens have blamed higher unemployment benefits, limited immigration, childcare challenges . . . and Amazon. The ecommerce leader recruited aggressively last year, hiring 500,000 people worldwide, while in the US, it paid at least $15 an hour before benefits, double the federal minimum wage. 

Line chart of Average hourly earnings, not seasonally adjusted ($) showing Pandemic demand has boosted warehouse workers' wages

5. US takes down Iranian websites
US authorities have seized dozens of websites linked to Iranian groups, including the Revolutionary Guards, accusing them of spreading misinformation and operating in the country without licences. The Department of Justice said 36 websites had been taken down, 33 of which were operated by the Iranian Islamic Radio and Television Union. 

Tech tools — Brave and Vivaldi push privacy

Pro-privacy browser Brave has launched a global beta of its own-brand search engine Brave Search, reports Techcrunch. The non-tracking search engine is being offered as one of multiple search options that users of the browser can pick from (including Google’s), but Brave says it will make it the default search later this year. Meanwhile, a 4.0 version of Vivaldi, which offers similar browser privacy features, was launched this month. It has now added translation and the options of adding an email client, calendar and RSS reader.

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China bolsters ties with Myanmar junta despite international condemnation




Trade and diplomatic ties between Myanmar and China are normalising in the face of intense domestic opposition and international condemnation of the military junta that seized power in February.

Beijing has strengthened relations with Myanmar’s military leaders despite a series of violent attacks against Chinese business interests in the country after Aung San Suu Kyi’s government was toppled.

Yun Sun, an expert on Myanmar-China relations with the Stimson Center, a US think-tank, said Beijing had already made a “fundamental assessment” that Myanmar was moving into another prolonged period of military rule.

“I think the Chinese can see that this military coup is successful and is here to stay,” she added.

The resumption of state-level engagements and economic activity signals that Myanmar is reverting to its traditional economic reliance on China. The country has used its larger neighbour as a buffer against international sanctions and divestment by foreign investors, who have announced plans to quit the country or shelved projects.

Since the coup, 875 people have been killed by the junta and 6,242 arrested, according to the Assistance Association of Political Prisoners (Burma), a human rights group. The country’s economy and public services were severely disrupted by mass protests in the three months that followed the putsch, and have only partially recovered.

The resumption of bilateral trade will fuel the widespread suspicion among anti-coup resistance groups that China was prepared to support the new military regime.

The cumulative value of China’s imports from Myanmar for the first five months of the year was $3.38bn, up from $2.43bn in 2020 and $2.56bn in 2019, before the coronavirus pandemic, according to official Chinese customs data.

Exports to Myanmar for the same period have not recovered to the same extent, however. By the end of May, goods valued at $4.28bn had been shipped to Myanmar, compared with $4.56bn and $4.79bn in the two previous years.

In a further sign of strengthening diplomatic relations, Chen Hai, China’s ambassador to Myanmar, met coup leader and military commander-in-chief Min Aung Hlaing in Naypyidaw, the capital, in June. In a subsequent statement, Chen referred to Min Aung Hlaing as the leader of Myanmar.

China was among the countries that abstained in a UN general assembly vote last week calling on the international community to halt the flow of arms to Myanmar and release Aung San Suu Kyi and other political detainees. 

Beijing had good relations with the government of the deposed leader, who is in detention facing multiple criminal charges. However, it has refrained from criticising the military, fanning anger among the mass protest movement that sprang up after the coup. 

Beyond being Myanmar’s biggest trading partner, China also has strategic infrastructure investments in the country, including energy pipelines that give Beijing a critical link to the Indian Ocean.

James Char, a Myanmar expert at the S Rajaratnam School of International Studies in Singapore, said many people in Myanmar still blamed the Chinese government and business interests for complicity in supporting the military’s decades of rule before the transition to democracy.

“The Chinese, themselves, are very clear about [public sentiment in Myanmar],” Char said.

Attacks on China-linked businesses in the wake of the coup culminated in an explosion at a Chinese-backed textile factory west of Yangon on June 11, according to reports from local Myanmar media, as well as junta-controlled information services and Chinese state media.

Beijing’s wariness of inflaming Myanmar protesters would probably slow Chinese direct investments and the resumption of planned larger-scale developments that formed part of President Xi Jinping’s Belt and Road Initiative, analysts said.

Additional reporting by Sherry Fei Ju in Beijing

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Australia calls Great Barrier Reef warning politically motivated




Australia has labelled a draft decision by the UN’s World Heritage Committee to include the Great Barrier Reef on its “in danger” list as politically motivated.

The committee, which is chaired by Tian Xuejun, China’s vice-minister for education, and selects Unesco World Heritage sites, proposed adding the world’s largest collection of coral reefs to the danger list because of the damaging impact of climate change and coastal development.

The designation could ultimately lead to the reef losing its World Heritage status, although officials said listing was intended to prompt emergency action to safeguard a living structure that stretches 2,300km along Australia’s eastern coast.

But Sussan Ley, Australia’s environment minister, said the government had been “blindsided” by the committee’s finding and alleged there was a lack of consultation and transparency. She added that Canberra would challenge the draft decision.

“When procedures are not followed, when the process is turned on its head five minutes before the draft decision is due to be published, when the assurances my officials received and indeed I did have been upended, what else can you conclude but that it is politics?” she said.

That the World Heritage Committee is chaired by a senior Chinese official has stoked suspicions in Canberra that it had been singled out over its diplomatic and trade clash with Beijing.

China-Australia relations have soured following Canberra’s call last year for an inquiry into the origins of Covid-19 and Beijing’s imposition of tariffs on Australian wine and barley imports.

Ley said she and Marise Payne, Australia’s foreign minister, had already spoken with Audrey Azoulay, Unesco director-general, to complain about the draft decision.

But scientists downplayed the suggestion that the “in danger” listing was politically motivated. Three mass bleaching events in five years demonstrated the need for the government to do more to tackle climate change, they said.

“I’m seeing some press coverage saying this is all a plot by China not to buy wine, lobsters and to screw the Barrier Reef. I think that’s pretty far-fetched given that the draft decision released overnight will be voted on by 21 countries,” said Terry Hughes, professor of marine biology at James Cook University.

The controversy will heap further international pressure on Canberra, which has been pressed by the US, UK and others to commit to a national target of net-zero emissions by 2050.

In a draft decision due to be voted on next month, the committee urged Canberra to “provide clear commitments to address threats from climate change, in conformity with the goals of the 2015 Paris Agreement, and allow to meet water quality targets faster”.

It noted the loss of almost one-third of shallow-water coral cover following a “bleaching” event in 2016 — a process linked to warmer than normal water that can lead to a mass die-off of coral.

The row over the “in danger” listing occurred at a difficult time for Australia’s conservative coalition, which is embroiled in internal squabbling over climate policies.

On Monday, Barnaby Joyce, a climate sceptic and supporter of coal mining, ousted Michael McCormack to become leader of the National party, the junior coalition partner to the Liberal party, and Australia’s deputy prime minister. Joyce is expected to oppose any move to commit to net zero by 2050.

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