The Global Economic Outlook for 2021

The year 2020 has been among the most challenging years in recent times. The novel coronavirus pandemic has triggered a global recession.

According to the International Monetary Fund, global GDP growth is likely to shrink by 4.4% in the current year. Advanced economies will witness GDP contraction by 5.8%. On the other hand, emerging economies will see GDP contraction of 3.3% for the current year.

However, the outlook is better for 2021. As the chart below from the IMF shows, global GDP is likely to expand by 5.2% in the next year.

Again, emerging market growth is likely to be stronger as compared to developed markets.

I have the following conclusions to make if global GDP does bounce back strongly in 2021.

First, I expect inflation to accelerate globally. Central banks will continue to pursue expansionary policy through the next year. Easy money coupled with economic recovery is likely to trigger inflation.

Second, I expect oil prices to trend higher as demand recovers on a relative basis. Investors can consider exposure to some quality oil and gas stock.

Third, I expect gold and silver to do well in 2021. Investors can remain invested in physical gold and silver. In addition, gold and silver mining stocks can be considered.

Fourth, I expect Bitcoin to do well. As fiat money loses value, investors will seek refuge in hard assets and alternative currencies like Bitcoin.

Fifth, Keep an eye on companies in the vaccine race. One or more companies will deliver the vaccine and the stock of these companies will trend higher.