The Banking Executive Magazine - March 2021

Global Economic Outlook 2021 RECOVERY: SECTORS PROJECTIONS Sectors: Services: The recovery of the service sector will depend largely on how ef- fective vaccines are in achieving herd immunity, and how fast they are distributed. If vaccines are distrib- uted in bulk and lockdown measures begin to fade, advanced economies would reach herd immunity by mid 2021, and the services sector would directly rebound. There is also an op- portunity for developing economies to permanently shift to a more digi- talized service sector, as the pan- demic has given them the opportunity to familiarize themselves with appropriate technology, which has vastly increased growth in serv- ices by complementing traditional means of work. Manufacturing: For 2021 and be- yond, Covid-19 might have been a blessing in disguise for the manufac- turing sector. Yes, output has vastly decreased as global trade and supply chains took a grand hit, forcing many manufacturing companies to either exit the industry completely or tem- porarily suspend operations. But for those that survived, 96% of manufac- turing CEO’s have claimed that the pandemic has sped up their digitiza- tion plans, thus allowing them to in- crease outputs for a lower cost. And with the promise of better 5G net- works, AI systems, and virtual reality models, the future of this industry seems promising. IT and Communications: This sector can be seen as a hero of the pan- demic. From virus heat maps and vir- tual clinics, to online learning and corporate meetings, the IT and com- munications sector helped humanity endure lengthy economic shut- downs. As for the future, the world has now embraced technology more than ever before and is not going to look back. Automated manufacturing plants and AI service robots are both set to change the manufacturing and service sectors in the near future, causing various low-to-medium skilled jobs to become obsolete while high-skilled opportunities in- crease. Oil and Transportation: 2021 doesn’t look like the year in which oil rebounds, in fact, oil prices might take as long as 2023 to go back to pre-pandemic levels. This pessimistic outlook is related to the transporta- tion sector, with new strains of the virus emerging and vaccines set to take a long time before being prop- erly distributed in developing na- tions, meaning that the travel industry, and overall demand for oil, will remain stagnant. Additionally, OPEC+ producers have already agreed to increase oil output by 500,000 barrels per day at the begin- ning of 2021, with further discus- sions to possibly re-increase output by an extra 500,000 barrels per day beginning 1st of February 2021. If these increases prove to be too im- pulsive, oil prices could even see a further decrease in 2021. ANTICIPATED GROWTH BY REGIONS 2021: MENA Region: In 2020, and after being forecasted to grow by 2.6 percentage points, the MENA region’s growth instead con- tracted by 5.2%. Due to the duality of the Covid-19 pandemic and oil crisis, oil exporting countries in MENA suffered incredible losses while the gains of oil-importing ISSUE 147 MARCH 2021 the BANKING EXECUTIVE 25