NEW YORK, December 22nd (IPS) – 2020 ends with the world embroiled in an unprecedented human and economic crisis. The pandemic has contaminated 75 million people and killed 1.7 million. With the lockdowns, the global economy has suffered its worst recession in 75 years, resulting in lost incomes for millions of people. What does the New Year bring in such a bleak environment? While uncertainty is the only certainty, eight points should be decisive in the coming year:
Isabel Ortiz 1. A gradual but uneven recovery
With the use of vaccines and public support, high income countries will be on the path to recovery from the second half of 2021.
However, recovery will be delayed in middle-income countries, and particularly low-income countries in Africa, Asia and Latin America – unless the United Nations or China provide them with adequate COVID19 vaccines and governments escalate public support.
The more affected sectors – tourism, travel, hospitality, entertainment and labor-intensive activities – will take longer to recover. China was the only country to see significant economic growth in 2020, and that trend will accelerate in 2021. International trade will recover, but it will be a “deglobalized” world with reduced global supply chains and more local components.
2. More poverty and inequality in 2021
While some have benefited from the pandemic, such as online stores, remote tools / software, pharmaceuticals, and medical services, the majority have not. The International Labor Organization (ILO) estimates that 590 million full-time jobs were lost in the last half of 2020.
Numerous social protection measures have been implemented but these are insufficient and poverty is increasing in all countries. With forty percent of the world’s population (3.3 billion people) living below the international poverty line of $ 5.5 a day, the World Bank estimates an additional 150 million people will fall into extreme poverty by 2021. More public support and progressive taxation are needed to redress these trends.
However, so far, large corporations have benefited most from the trillion dollars in COVID19 financial aid and assistance programs, which has contributed to growing inequalities. Poverty and inequality will lead to further protests in 2021.
3. More public health, but unnecessary austerity
One positive aspect of the pandemic is that the world has recognized the need for public health systems – which, after a decade of austerity (2010-2020), are generally overburdened, underfunded and understaffed. While public health spending will continue to rise, many are concerned about the threat of new austerity measures. The unforeseen costs of the pandemic have resulted in unprecedented debt and budget deficits, and governments could resort to austerity and public service reforms instead of looking for alternatives to increasing budgets such as wealth taxation, fighting tax evasion and illicit financial flows. Governments that choose austerity measures in 2021 should expect protests and social unrest given the negative social impact.
4. Digitization and changes in the world of work
The pandemic has accelerated technological change in the workplace. More teleworking and less office time prevent women from having to choose between work and family, and they bring fathers more into household responsibility. Studies have shown that 47 percent of U.S. companies have employees working full time from home after the pandemic. On the flip side, key workers such as health workers, cleaning staff, delivery staff or retail workers who will have more bargaining power in 2021 will be able to push harder for better working conditions.
5. Elimination of world disruption
The US President-elect Biden will renew multilateralism, the Paris Treaty and other international agreements, the defense of human rights and the interests of the Pax Americana. The United Nations will continue to have problems given the lack of funding. Four years of Trumpism and false news have left their mark on the world, and despite democratic attempts to improve the world order, the trend towards authoritarian nationalist governments is not going to reverse in 2021 – this will require further efforts to combat polarization, inequality and disinformation. Jihadism will continue to grow in Africa and South Asia.
6. A chance for climate change
The world would have to repeat the 2020 emissions reductions over the next decade to bring global warming to 1.5 degrees by the end of the century. However, low oil prices could delay investments in alternative energy sources in 2021, although in the medium term these will replace fossil fuels in much of the world.
7. The risk of a new financial crisis in 2021 will remain high
As industry and services stagnated, investments went to the under-regulated financial sector, where higher profits should be made from speculation. Equity markets will remain volatile, but likely buoyant, regardless of the real economy. However, rising bankruptcies mean that banking risks will increase significantly in 2021.
8. New roaring 20s
After a year of lockdown, people will make up for lost time and want to rush to parties, dinners, festivals, shows, sports and travel as soon as possible. The year 2021 could flourish in a new summer of love, a creative existential time – carpe diem!
The debate about possible ways out of the current crisis continues throughout the year. This is an unprecedented crisis that could take new turns and governments are learning from it. There are two options in total. One of them is the restoration of neoliberal policies, austerity measures and minimal public services that undermine welfare, with taxation of the rich limited, which will lead to more inequality and social unrest. The other is a more democratic and socially progressive way in which public policies benefit citizens, including fair economic job creation with social protection, financed through progressive taxes, the elimination of tax evasion and illicit financial flows. The coronavirus crisis could turn into an opportunity to make the world a better and more just place for all in 2021.
Isabel Ortiz, director of the global social justice program for the Political Dialogue Initiative at Columbia University, was a director of the International Labor Organization and UNICEF, and a senior official at the United Nations and the Asian Development Bank.
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