China, South Korea and other countries able to contain the coronavirus are likely to be in a good position to bounce back during 2021, JPMorgan director of economic research Bruce Kasman told The Jerusalem Post on Monday, noting that the COVID-19 vaccine is crucial for North America and Western Europe in order to “turn the tide” and contain the virus as well.
“China will continue to benefit as they were able to contain the virus and, like Israel, are tech-oriented,” he said. He pointed out that China is expected to be only 1% below its pre-pandemic growth rate for 2021, but Brazil and Mexico are expected to show a decline of 5%-10%. The US, on the other hand, is expected to be 3% below its expected growth had COVID-19 not happened.
Kasman used his Monday presentation at the Eli Hurvitz Conference on Economy and Society to suggest that the vaccine is a game-changer when economy is concerned, but economists with ears to the ground are concerned about the quality of the decisions those in power make.
One such decision is the looming deadline for Brexit, meant to take place at the end of the year.
Kasman explains that even “a skinny deal," meaning an agreement which might leave a lot to be desired for both the EU and the UK, beats leaving the EU without one.
The UK’s economy is likely to underperform even if a deal is made, he said – but should no deal be struck, the EU would lose 0.5% of its expected growth - and London 2%.
Not only are different nations expected to fare based on their ability to contain the virus, good (or bad) decisions and the availability of vaccines, but each society has different sectors which will recover quickly, slowly or not at all. The hi-tech sector, globally, suffered less than most while the service industry was hit hardest.
Just as the 2008 economic crisis led to radicalization on both the American Left and Right – with JPMorgan chairman Jamie Dimon telling Politico in 2012 that he is “barely a Democrat” and that “attacking that which creates all things is not the right way” – this pandemic will also shape politics. How? That is still unknown to us.
Since the Democratic Party hasn’t been able to take over the Senate, Kasman thinks it’s unlikely the US will be able to carry out a Green Deal using legislation – and that, once in the White House, Joe Biden will need to use executive orders to implement at least some of these policies. Human rights and seeking partners are two things he thinks Biden will emphasize.
“If Trump sought to restrict Chinese access to the US market, Biden is expected to get China to open to the US,” he explained. “Both see China as an economy which isn’t playing by the rules, so to speak, and there are those in China who would support such a [Biden] policy.”
How do economists make their predictions? Kasman explains that, in the case of JPMorgan, there are roughly 30 experts who pay close attention to the nations of the world, among them Israel, and they are asked to provide weekly data-based studies of what is taking place in their respective fields.
Such reports are sent to the top, where their validity is challenged and where the authors are expected to defend their view.
"All of our team members combine academic insight with real-world experience, having worked at places such as the IMF,” he added.
“As you can imagine, 32 people aren’t likely to agree on everything.”