We expect 2021 to be a year of two halves—starting slowly with a relatively weak Q1, while additional waves of COVID-19 constrain economic activity, and vaccination has not progressed sufficiently to make a big difference yet. Closer to Q3–Q4, we expect many emerging—as well as developed—markets in the region to have reached sufficient vaccination levels (if not outright herd immunity) to allow for most economic activities to reopen, providing a welcome economic boost, and driving a strong recovery in demand in H2 2021. That said, companies should still be prepared for economic and political volatility throughout the year, even as their attention shifts toward strategies to manage the recovery, re-segment their customers, invest in e-commerce, and reassess product portfolios.

EMEA will see a bounce-back in 2021, but demand is likely to remain volatile. Businesses will find opportunities among more resilient segments within most EMEA markets, but overall, companies should expect a somewhat faster recovery in Central and Eastern Europe and Sub-Saharan Africa, followed by the Middle East & North Africa and Western Europe. We have a higher level of confidence in the second half of 2021’s dynamics, when vaccination should have started to drive up confidence and spending in a more sustainable way across major Europe, Middle East, & Africa markets.

Changing pressures on government finances mean higher taxes and/or spending cuts in 2021 are likely. Businesses selling to governments will face a complex 2021 environment, as social and health spending dominate government agendas, but selective opportunities in the region remain. All companies should be monitoring for potential tax increases across their EMEA portfolio, as many governments will have to find alternative sources of revenue to plug deficits created in 2021 and reduce rapidly rising debt levels.

Labor market dynamics will drive different paces of recovery of consumer spending. Consumer spending dynamics will be key for understanding the pace of recovery in 2021—any upside in terms of less labor market pressure and/or reduced consumer fear and greater willingness to spend will point toward a potentially faster-than-anticipated recovery, especially in the second half of 2021. Firms need to prepare with both upside and downside cases to be able to respond to quickly changing dynamics among consumers, which will impact other industries.

Be prepared for volatile and uncertain demand and operating conditions during all of 2021, despite the beginning of a vaccine rollout in a number of countries. Meanwhile, social dissatisfaction is likely to drive unpredictable political and policy decisions, while business and consumer confidence will fluctuate. Ensure your team is fully equipped to deal with this uncertainty and can respond quickly as conditions on the ground change.

Download an executive summary of our 2021 Europe, Middle East, & Africa Outlook for a full breakdown of the global drivers of the region in 2021 and how they impact your business:

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