The trends likely to shape the global economy this year

From lockdowns to crypto, regulators are going to have to perform quite a balancing act.
Image: Kiyoshi Ota/Bloomberg

No outlook for 2021 and beyond would be complete without including Covid-19 and the vaccines deployed against it.

The other top themes likely to find traction this year are reflation, a global move toward even tighter regulation, and crypto assets as opposed to just crypto currencies.

The race for a vaccine

This year will be more about the vaccines deployed against the disease than the disease itself. South Africa plans to vaccinate its healthcare workers by the end of February, a noble and well-placed goal, and 20 million South Africans by the end of the year.

Arguably, this latter goal is ambitious from a logistical point of view. There are also likely to be difficulties acquiring and even financing suitable quantities of the vaccine. For context, the Philippines has a population of 100 million people. It plans to vaccinate 100% of its population – but only by 2023.

Cause for optimism is that at least five major vaccines are available to the world.

This includes the three major ‘Western’ vaccines and one each in Russia and China, together with a number of others in various stages of global development. What this means is that ultimately, there will be many channels from which to acquire a vaccine.

The key trend for 2021 then is for extended periods of variations on lockdown to buy time with which to achieve herd immunity. The lighter the lockdown and the sooner immunity is achieved the less economic damage. On the other hand, the longer this takes, the more likely the economic damage is to be of the kind that cannot be recovered from.

Reflation: Inflation is dead, long live inflation

From an Organisation for Economic Co-operation and Development (OECD) perspective, inflation has been a non-issue for the better part of the 2000s but even more so since the global financial crisis. This has been true for South Africa as well given that inflation has been within the target range since 2010.

For large developed market economies, inflation peaked between 12% and 16% in the 1970s, mostly as a result of the Opec oil supply crisis, and has been trending downwards ever since. With massive monetary and fiscal stimulus directed at supporting economies and their people during Covid-19, countries’ balance sheets have never expanded more rapidly.

At some point this must be inflationary.

But it wasn’t in the period post the massive stimulus associated with the global financial crisis, so why should it be any different now?

There are three factors at play:

  • The demographic benefit of population growth driving down marginal labour costs is abating;
  • The deflationary impact of technology is also abating, a trend that is being accelerated by the regulatory aspect; and
  • A move toward localisation away from globalisation, which also removes some of the pricing advantages enjoyed by the world economy for the last 40 years.

Combine this with supply bottlenecks as a result of logistics channels being coronavirus-constrained and the elements are there for the re-emergence of inflation.

Regulation, regulation, regulation

No one particularly likes regulation, until things go awry. We expect to see much more regulation in 2021.

As an example, South Africa’s Protection of Personal Information Act goes into full force on June 30 this year.

The European Union is likely to continue to evolve its stance on its General Data Protection Regulation (GDPR), which inevitably affects the big tech companies that have been such darlings of the markets for the last few years, and which are now subject to greater and greater levels of distrust and anti-trust lawsuits.

Among the most jarring confluence of regulators, tech companies and users in recent months has been the way US President Donald Trump has very effectively used platforms like Twitter to get his particular message out to market.

In response to the recent violence that took place at the US Capitol, a number of platforms, including Twitter, banned the president from their platforms, inevitably sailing very close to being the arbiters of free speech and justice – behaviour that is arguably well outside their purview.

There is no question that tech companies are playing a growing role in censorship – and even shaping news flow – which is become increasingly problematic.


Expect to see more regulation in the months ahead, including more aggressive tactics out of China where business entrepreneurs like Jack Ma of Alibaba have been almost entirely derailed through the failed listing of Ant Group.

This is culminating in speculation that entities that become overly large are increasingly subject to the risk of nationalisation.

Crypto assets

One area in which we see a more liberal market approach from regulators is in the crypto or digital assets space.

Our own regulator, the Financial Sector Conduct Authority (FSCA), took a very smart path in deciding to regulate crypto assets rather than just crypto currencies.

Read: Crypto intermediaries must now be licensed FSPs

This essentially future-proofs the South African regulatory environment from what is very likely to be rapid evolution in this space.

That bitcoin has rallied so significantly over the last year – even if that does come with extreme levels of volatility – only serves to reinforce what we think is likely to be a key trend for 2021: more and more mainstream acceptance of digital assets, primarily blockchain-based and in spaces we perhaps didn’t see coming. Digital mortgage contracts anyone?

Andrew Duvenage is managing director of NFB Private Wealth Management.


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And they thought polio was dead. So like polio, inflation will rear its ugly head.

Quote: “Our own regulator, the Financial Sector Conduct Authority (FSCA), took a very smart path in deciding to regulate crypto assets rather than just crypto currencies.”

So supporters of MLM or Ponzi schemes (linked to crypto and FIAT) cannot argue (like the recent MTI scheme) that crypto does not fall under the scope of the FSCA, or similar regulatory bodies.

Our FSCA deals with advice concerning money/investments. People that use crypto have always argued its benefits, including being used as money to pay for goods/services. So crypto is money. And money falls under the FSCA.

Then again, respectfully, if you still want to get involved in a MLM/Ponzi scheme, hoping to outsmart the system, by entering earlier than the rest & get out sooner… all means, go for it. Life is all about risk. Just don’t come running to regulatory bodies if you lose, as you knew the rules of the game.

Since we are in the information-age, any future debate for and against a possible Ponzi scheme (be it in crypto or Fiat) should NOT be whether something is a Ponzi of not (it would be too obvious…thank to information age), but future arguments should rather be how far down into the scheme you are, and how far off the estimated collapse would be. You’ll need a gauge to judge fund inflows & outflows, and then make a call. In order to earn your capital back, plus some more.

But yet again, in any Ponzi, you have not proudly “made money”….you’re just sitting with someone else’s money, who thought he/she will also give it a run & ‘play’ the system.

Then you have those that genuinely believed a Ponzi scheme is not what it is….and still defended it: those that fall for the fear that “crypto is the future” / “FIAT money systems will fail soon”…and with an induced fear they’ll “stay behind in the tech sphere” are easy meat to convince to invest in cleverly drummed up crypto schemes. Fiat-schemes still exist, but people are somehow magically drawn to crypto schemes, toted as “the future of money”.

An happy to embrace crypto, but its still in its infancy. Despite doomsayers, FIAT will be with us for a long time. Nothing wrong with crypto….just don’t fall for clever schemes within the valid crypto space. MTI was about enticing people to give away control of their BTC wallets. The next scheme may come up with “we’re using AI, artificial intelligence” to impress the greedy souls.

Ask questions: is it FSCA registered? (or with the regulator in the country of your residence)
Has the company’s accountants came forth with audited financials?
Has the scheme a hierarchy / compensation levels resembling an MLM scheme?
Do you understand the ‘business model’ of the scheme? (what is the product or service provided; do you earn dividends and/or share appreciation?)

If still unsure: turn to Money Web’s commentators 😉

End of comments.




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