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December 11, 2020

Macro Series

Ten developments to watch for in 2021, and beyond

BY John Llewellyn, Russell Jones

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LlewellynConsulting’s Ten developments to watch for in 2021, and beyond details what we judge most likely to happen; and pays particular attention to detailing what we see as the main risks and uncertainties.

  1. There is growing recognition of the existential threat of climate change, but not all economies are set to cope well with the transition.
  2. Nor will every country adequately manage the disruptive impacts of technological change, let alone turn them to their advantage.
  3. Vaccines offer the hope of a sustainable recovery, but many uncertainties remain, and normality is likely some way off.
  4. Inflation is likely to remain historically subdued in 2021, but the picture thereafter is less clear – with risks in both directions.
  5. Monetary policy stands to become yet more unconventional, even if there is a reluctance to embrace more negative policy rates.
  6. With interest rates so low there is no urgency for fiscal consolidation, but this may not prevent premature calls for budgetary consolidation.
  7. The seemingly inexorable trend towards outright monetary finance need not necessarily lead to inflationary catastrophy.
  8. Rarely have good supply side policies been so important, yet policy performance in this area is likely to vary considerably across countries.
  9. Populism has burgeoned for powerful reasons, and it would be optimistic to expect a new incumbent in the White House rapidly to turn the tide.
  10. A potential cascade of defaults in the non-OECD economies may require innovative solutions if serious consequences are to be contained.


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