Visual capitalist has examined more than 200 articles, whitepapers, podcasts, and interviews from experts on their predictions for 2021. The result: the forecast consensus. A bingo card that clearly illustrates what the majority of experts agree on:
Prediction Consensus: What the Experts See Coming in 2021 — Source: https://www.visualcapitalist.com/2021-predictions-consensus-experts/
The 5 topics that (besides COVID) according to experts will shape the year 2021 the most:
- ESG is reaching a turning point
- Weakening US Dollar
- Great rethinking of office life is underway
- K-shaped recovery — inequality continues to work
- Most companies will employ a hybrid work model
ESG stands for “Environmental, Social and Governance” and is used as a broad term for CSR — Corporate Social Responsibility. It summarizes the areas in which we have to act in order to protect nature, ensure social progress and governance and improve standards that support the development and prosperity of the world economy. In other words, the voluntary contribution of business to sustainable development that goes beyond the legal requirements.
What does ESG say?
ESG describes the central factors that are used to measure the sustainability and ethical impact of an investment, an organization, or corporate social responsibility. The ESG corporate management approach emerged from the area of socially responsible investment and describes ecological and social areas in corporate management that are not captured by financial indicators.
When investing in sustainable investment products, ESG criteria (alternatively also ESG rating) are mentioned again and again. These encompass a whole range of properties that a company, fund or other investment must have in order to be considered sustainable — and really contribute to making the world a little better and paying more attention to environmental protection and human rights.
In the coming years, the aspect of sustainable investing is likely to be in the focus of investors again. COVID-19 should even accelerate this trend, the current crisis is a “historic opportunity” to bring the common good back into focus and to build a sustainable economy. During the pandemic, it had become apparent that society was able to find new solutions when boundaries were shown. The lack of ecological sustainability probably made the outbreak of the virus possible in the first place. Due to a lack of economic and social sustainability, the crisis caused by the coronavirus was then further exacerbated. Recurring crises can only be avoided if these interrelationships are recognized and addressed. Scientists, therefore, appeal for a more sustainable way of life and behavior and for areas such as economy, consumption, nutrition, health care, mobility and energy to be made more sustainable immediately.
The logic behind the rule “the higher the interest, the stronger the currency” is fundamentally correct. Higher interest rates mean that bonds in this currency area bring more returns than those in other currency areas. So international investors will also increasingly buy these bonds. To do this, however, they must first acquire the relevant currency — and this higher demand strengthens their exchange rate.
US DOLLAR TO EURO
Dollar rate forecast: US interest rates down, euro/dollar up — why?
Interest rate differential is just one of many aspects that influence the trend in the euro / US dollar relationship. When it became clear that the Corona crisis was going to take on really immense proportions the US dollar began to lose ground significantly. And one of the decisive reasons for this was not the interest rate differential, but another important influencing factor: the political and economic framework conditions.
The decline of the US dollar and thus the strengthening of the euro against the US dollar in 2020 had primarily political backgrounds. A strong, business-oriented, and consistent political leadership offer foreign investors an ideal level of investment security. After initial difficulties, the new US administration is likely to be more credible than the one that was in office until January 2021, i.e. investor confidence in the dollar area should increase in the course of 2021.
Under normal circumstances, the US is not just seen as the stronger economy. Should the geopolitical imbalance normalize when the new US administration is in office, the US dollar would also regain its status as a “safe haven” among currencies, which could slow the euro.
What cannot be predicted are factors such as the pandemic itself, the acceptance and effectiveness of vaccines as well as consumer behavior until then and afterward are unknowns in this equation!
Offices as a social hub
It is very likely that the office will turn into a “social hub” for many companies. In such social hubs, employees will meet, network, hold brainstorming sessions and take part in training courses. After all, it is expected that large numbers of employees will continue to work from home several days a week, so the function of the office is changing dramatically.
As we work from home more and more often, the office will most likely not be the place where you always sit at your desk from 9 to 5. People tend to come to the office to meet, attend training, organize events or be creative together. Because even if many meetings can be held via video conference without any problems — there is still no need to discuss a topic face to face with one another, to interact actively and to exchange ideas. We are not made to communicate 24/7 on our digital screen. Therefore, many offices will be designed to be more flexible and offer many more social and creative spaces.
It’s very likely that there will be more flexibility in the new office layouts than ever before. The desks will be used more flexibly and offices will contain a lot of open space so that they can be used flexibly for different tasks and meetings. In many companies, standard office furnishings with only fixed desks will be a thing of the past.
As already mentioned, the office will become a social hub with a need for more flexible (work) spaces. So flexible that you can easily transform your work area into an event space. Of course, this requires flexible equipment such as roller tables and mobile writing surfaces that allow maximum flexibility. Do you need space for a big brainstorming session? Simply roll away the unnecessary furniture and set up your meeting room in no time.
In the vicious circle of poverty
The gap between rich and poor is growing. Escaping a life of poverty has become more difficult. Particularly problematic: People in poverty are repeatedly caught in a negative spiral. They often have poor chances in the job market, can invest less in their health and education, and have little money for leisure and culture. This vicious circle of poverty often continues in the following generations: The children from socially disadvantaged homes also have fewer educational opportunities, are more often healthier, and are socially and culturally marginalized. In this way, social inequality continues to solidify.
Social inequalities are growing in many highly developed societies: it is increasingly difficult for the poorly qualified to find work. The integration of many immigrants is becoming more difficult. The unemployed lack money, self-respect and recognition. More and more people are considered poor. The once-dominant and politically stabilizing middle classes are shrinking. The number of highly qualified and high earners is growing.
On the one hand, social inequalities affect the everyday life opportunities and experiences of individuals. On the other hand, social inequalities also create social problems and political disputes that extend beyond the lives of individuals. The social and political significance of social inequality is undeniable.
How can more equality be achieved?
Education and the opportunities it provides are of central importance. If more educational successes are made possible in the future for groups of the population with little or no education, and if the proportion of highly qualified people increases overall, the prospects for professional and social advancement improve. In contrast to positions that require few qualifications, there will be plenty of jobs for those with higher qualifications. A (social) opening of the education system — also through an expansion of further training — changes the conditions on the labor market itself and makes it superfluous to compensate for its undesirable developments (unemployment, precarious working conditions, low wage sector) through redistribution and protection and thereby cause considerable “land damage.”
Adequate qualification strengthens people’s confidence to meet growing demands themselves and reduces the need for and awareness of being dependent on help. A lower social selectivity and a higher effectiveness of the education system set productive forces free and do not, like the socio-political redistribution, feed on the results of production.
Concerns about a K-shaped recovery are mounting. This would mean continuous growth but would be strongly divided between industries and economic groups.
It’s a scenario where big-box retail and Wall Street banks benefit and corner shops and restaurants and other service workers are left behind. Although GDP numbers for the next few quarters may not be readily apparent over the next few quarters, which will seem gaudy historically, the disparate benefits of the recovery carry longer-term economic health risks.
The K-shaped narrative is gaining traction as the story of two recoveries aligns well with the ongoing outperformance of risk assets and real estate, while front-line service jobs risk permanent elimination.
The K-shaped recovery is a repetition of what we called the fork in the economy during the great financial crisis. It’s really about growing inequality. Clearly, when we talk about K, the upper path of the K is the financial market, the lower path is the real economy, and the two are separate.
Aime when 52% of stocks and mutual funds are owned by the top 1% of the workforce.
It’s not just about owning assets, it’s also about the nature of those assets. The stock market gains were largely due to a handful of stocks. With the exception of newcomer Salesforce.com, Apple, Microsoft and Home Depot contributed more points to the Dow Jones Industrial Average this year than the other 27 stocks in the index combined. Some possible solutions to structurally solve this problem are unconditional basic income or MMT (Modern Monetary Theory).