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Thursday, June 24, 2021

Some 2021 Regional Economic Outlooks

The year of 2021 will be critical for the whole world that is struggling to end the COVID-19 pandemic and committed to addressing its long-term impacts.

The pandemic has taken a heavy toll on the world economy, disrupted globalization, amplified unilateralism and accelerated a crisis in international cooperation. To tackle those challenges will not be easy, and requires collaboration across ideologies, cultures and governments.


In 2021, the ravaging pandemic is still one of the most threatening challenges facing the U.S. government.

In a country that boasts the most advanced medical technology, some 21.5 million people have been infected with the virus and more than 364,600 lost their lives.

Anthony Fauci, the nation’s top infectious disease expert, has recently warned that without substantial mitigation, the middle of January could be a really “dark time” for Americans.

One of the major problems exposed in the country’s fight against the pandemic is its lack of a unified response on the national level, said Da Wei, a professor with China’s University of International Relations.

Pulling out of the World Health Organization at a critical juncture in the global fight against COVID-19, Washington has fallen further into the quagmire of unilateralism. In 2021, it remains uncertain whether the incoming administration can truly bring the country back to the track of multilateralism.


A COVID-19 resurgence has been unleashing more uncertainty into Europe’s economic recovery, as the European Commission predicted that output in both the euro zone and the European Union (EU) is “not expected to recover its pre-pandemic level in 2022.”

Meanwhile, multiple statistics showed that countries across Europe suffered a surge in non-performing loans, bankruptcy filings and unemployment rate, prompting governments to take measures to stabilize economies and ensure people’s livelihood.

The EU has been paving the way for the implementation of a recovery package totaling over 1.8 trillion euros (2.19 trillion U.S. dollars) to handle the socio-economic consequences of the pandemic.

Against such a bleak backdrop, economic cooperation between China and the EU has sustained momentum and kept pacing to a broader stage, with more opportunities sprouting after the completion of China-EU investment agreement negotiations and the entry into force of the China-EU agreement on geographical indications in 2021.


A new wave of infections has hit many countries in the Asia-Pacific region, indicating that combating the pandemic and managing its economic impact will remain a major challenge for the region in 2021.

Fortunately, with an array of deals having been sealed, countries have strengthened regional economic cooperation to jointly reverse the economic downturn.

The Regional Comprehensive Economic Partnership, a free trade pact signed in November, is widely believed to become a key driver to reboot regional economic growth in the post-COVID-19 era.

Economic activity in developing Asia is forecast to pick up to 6.8 percent in 2021 as the region moves toward recovery from the pandemic, according to an Asian Development Bank report released in December.

In particular, China has managed to control the outbreak and achieve a strong economic recovery, injecting vitality into the economies of Asia-Pacific countries with close ties with China. In 2021, China’s role in stimulating the regional economy is expected to become more prominent.


Since August 2020, four Arab countries, namely the United Arab Emirates (UAE), Bahrain, Sudan and Morocco, have successively announced the normalization of relations with Israel.

Ding Long, a researcher at the University of International Business and Economics in Beijing, said the normalization may aggravate the division of the Arab world, bringing a profound impact on the geopolitical landscape in the Middle East.

On the other hand, Saudi Arabia, the UAE, Bahrain and Egypt earlier this month decided to end three and a half years of diplomatic crisis with Qatar, showing their resolution to manage their divergences.

Yet, Washington’s escalation of maximum pressure on Iran has intensified the two countries’ face-off and caused widespread concern.

For Middle East countries, it is a long-term task in the 21st century to complete their national construction and governance capacity building, said Liu Zhongmin, a professor with Shanghai International Studies University.


In 2020, African countries have been grappling with coronavirus-induced economic decline and social unrest.

In West Africa, Mali witnessed a military coup, and protests broke out in several countries. In East Africa, clashes between government troops and local armed forces erupted in Ethiopia. Moreover, the dispute between Ethiopia, Sudan and Egypt over Nile water resources could further ratchet up regional tensions.

Encouragingly, upholding the vision of finding “African solutions to African problems,” regional organizations, including the African Union (AU) and the Economic Community of West African States, have been playing an active role in resolving the continent’s political, economic and social crises.

Thanks to these efforts, the political situation in West African countries is becoming stable and the peace talks in Libya are back on the right track. Without external intervention, the conflict in Ethiopia is also expected to end in the near future.

In 2021, with a maturer AU and more progress in stemming the virus, the overall security situation in Africa could continue to improve.


Latin American economies, with slower growth than other developing regions, have been plunged into the worst crisis in 120 years due to the coronavirus pandemic.

“The COVID-19 pandemic is having historic negative effects in economic, productive and social spheres, with lasting consequences and medium-term effects on growth and increased inequality, poverty and unemployment,” Alicia Barcena, executive secretary of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), has warned.

According to the UN agency, 2.7 million formal businesses are forecast to close in the region in 2020, while unemployment is expected to climb to around 10.7 percent.

How to improve governance capacity and lead the people out of the coronavirus crisis is a common challenge faced by Latin American governments, said Yuan Dongzhen, an expert on Latin America with the Chinese Academy of Social Sciences.

Sun Yanfeng, a Chinese academic on Latin America, said countries in the region should actively fight the pandemic to walk out of the crisis, continue economic reform to enhance internal driving forces, help the poor and vulnerable in their drive to bridge social disparities, and integrate into the external market to seize development opportunities.


Entering 2021, the Eurasian region is fraught with tough challenges such as fighting the pandemic, maintaining stability and reviving the economy, with geopolitical tensions between Russia and the West expected to persist.

In 2020, demonstrations broke out in Belarus following the August presidential election; Kyrgyzstan’s parliamentary election sparked off political unrest; and armed conflicts between Armenia and Azerbaijan in the Nagorno-Karabakh region flared up again.

The region needs to overcome the repercussions of regional turbulence in 2020, with stability deemed as a promising contributory factor to the region’s development. Notably, big-power influence play a significant role in determining the prospect for regional growth, but the rivalry between major countries, experts warn, will drag on or even become more intense in Eurasia in 2021.

The good news is that as this year marks the 20th anniversary of both the signing of the China-Russia Treaty of Good-Neighborliness and Friendly Cooperation and the establishment of the Shanghai Cooperation Organization. China and Eurasian countries are set to deepen mutually beneficial cooperation in the New Year, analysts said.

S. Jack Heffernan Ph.Dhttps://www.shayneheffernan.com
S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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