There are many signs indicting that the financial market rebound which has continued practically uninterrupted since the sell-off at the onset of the coronavirus pandemic in March 2020 is going to be backed by genuine economic recovery during 2021.
Warren Buffett has cited a “red hot” US recovery. Some estimate that President Joe Biden’s US$1.9 trillion infrastructure plan will lift US GDP by up to 4%. Fresh data from the US Department of Commerce shows the economy grew an annualised 6.4% in the three months through March, the second fastest rate since the third quarter of 2003. Some economists expect the US economy to be fully over the pandemic by late 2023.
Meanwhile, Jess Staley, chief executive officer of Barclays, predicted the fastest UK growth rate since 1948, at 6.5%. To be sure, he cites “tremendous pent-up demand” as one of the main drivers, underlining that a rebound from an exceptional low will always look better and be easier than ordinary incremental growth.
But The Economist is also heralding a really broad-based post-pandemic boom, with major developed economies such as Canada, France and Germany all likely to see annualised GDP growth rates in 2021 that are double to triple their 2016-19 average.
It’s a shame, perhaps, that economists would be ready to shrug off the millions of deaths in the pandemic this way. But it is at least some kind of silver lining after the darkness we’ve all been through. The less encouraging corollary is that the whole crisis-plus-recovery package may be just a foretaste of things to come.
Many horizon industries have benefited hugely from the Covid-19 crisis, while some sunset ones, like oil, have suffered hugely. French economist Thomas Piketty’s thesis holds that the historically untypical period of high growth and relative economic equality covering most of the second half of the 20th century came from two horrifically destructive wars in the first half, which devastated traditional economic structures and transformed industries. Those catastrophes ultimately produced the dynamic and inclusive growth of the 1950s and 1960s.
In the 21st century, we’ve seen economic and social structures stabilise, growth slow, and inequality increase. Now we’ve hit another global crisis which has catalysed change within business sectors and, potentially, within social and political attitudes too.
The signs are, though, that this crisis will be only the first. As climate change triggers increasingly devastating catastrophes worldwide over the next few decades, there’s going to be plenty more disruptive change, whether we like it or not.