Such optimism is also founded on the rollout of vaccines to control the coronavirus pandemic. That means a return to some semblance of business-as-usual in the course of 2021 is now less ambitious a prospect than it once was.
But that outcome would arrive too late to save many millions of jobs and the buildup of hundreds of billions of dollars in newly created public debt throughout the world.
What began as a year clouded by the milder threats of a fractious U.S. presidential election, ongoing trade tensions with China, and a hard deadline for U.K. relations with the European Union soon became an existential ordeal to salvage any economic growth at all amid unprecedented lockdowns.
Here’s a selection of charts with a final look at the havoc and ruin wreaked by Covid-19 during an extraordinary 12 months for the world.
The pace of recovery in the world’s advanced economies remains below pre-crisis levels, according to the OECD’s Composite Leading Indicators, which tend to precede economic turning points by about six months.
Easy Does It
Throughout the world, economic policy makers shifted into emergency mode. Central banks cut interest rates to new lows in a bid to loosen monetary conditions, or held them at ultra-loose levels below zero.
Officials also unveiled new emergency programs, quantitative easing went into overdrive, and central banks hoovered up huge swathes of government bonds just as treasuries started issuing more debt to fund their fiscal responses to the crisis.
The unprecedented spending by governments to cushion the fallout from lockdowns pushed up public borrowing throughout the world. For some countries, debt levels are now at the highest in decades.
For all their efforts, governments couldn’t protect every job, and unemployment rates have risen compared with the start of the year. With some sectors such as tourism and airlines facing long-term change, many jobs may be lost forever, raising the prospect of longer-term economic scarring.
The crisis has proven a setback for righting inequality. Migrant workers bore a heavy burden as many of their jobs were vulnerable, and they often also faced greater health risks working on the front-lines of the pandemic.
Still, remittances proved more resilient than expected. Cash transfers from immigrants in the U.S. to family in Latin America are on track to roughly equal the 2019 total, far better than the World Bank’s prediction in April for a drop.
Commerce Is Coping
Despite fears in April of a deeper collapse in international trade flows than at any point in the postwar era, the decline in 2020 turned out broadly similar to that seen during the global financial crisis. In part, this reflects the sharp fall in consumer demand in services where trade intensity is low, according to the OECD.
Joe Biden’s election victory in November may also help trade, if he dials back the “America First” policy the U.S. pursued over the past four years. That might help avert an outright reversal in globalization, an outcome that Bloomberg Economics calculates would reduce global gross domestic product by $31 trillion by 2050.
For all the setbacks of 2020, progress occurred on one front at least. Women broke new ground in wielding the reins of economic power, with both the U.S. and Canada picking female finance ministers for the first time. Janet Yellen will now take up her role as Treasury Secretary in 2021.
With assistance from Andrew Husby (Economist), Richard Marquit, Eric Martin, Michael McDonald and Enda Curran.