Despite optimistic sentiment in many global headquarters, 2021 will be a challenging year. We expect rapid swings across industries and customer segments as the domestic operating environment changes with shifts in fiscal support programs, monetary policy, and changes to social distancing regulations, as countries continue to grapple with COVID-19. This will lead to continued demand swings and supply chain disruptions across 2021, requiring significant executive attention on market monitoring and country-specific adjustments to strategic plans. For executives with responsibility for emerging markets outside of China, we continue to see a risk of substantial currency depreciations. Our latest Global Leadership Briefing, published by Ryan Connelly, FrontierView’s Practice Leader for Global Economics, details strategies to help mitigate the negative impact of an exchange rate shock on business performance in 2021 and beyond.

Following the COVID-19 recession, 2021 is a year of economic rebounds

It is important to differentiate between a rebound and an economic recovery. While most countries will see significant growth rebounds, many countries will not fully recover to normal economic growth for several years. The lasting impression of COVID-19 means that even when aggregate economic demand returns to pre-COVID levels, the distribution of economic activity will look very different.

The Events to Watch for 2021 have had few updates since first published in November

We see an increased likelihood of an upside breakout in oil prices due to falling global inventories, engineered by Saudi Arabia. We also expect a greater likelihood that the United States retakes a global role in climate change following the unexpected results of Georgia’s Senate election, which has resulted in a Democrat-controlled Senate. Firms should use scenario analysis to assess the impact on their global business, incorporating insights from across business units.

Firms need to conduct scenario analysis to anticipate changing assumptions

With the trajectory of economies grappling with the coronavirus still uncertain, and new concerns about potential COVID-19 mutations further complicating the global economic recovery, multinational executives need to lean on scenarios as they try to execute on their 2021 strategic plans. Scenarios help streamline information flow and reduce uncertainty into operational complexity that can be managed.

Download an executive summary of our latest Global Leadership Briefing report for a deep dive into our macroeconomic view of the global economic recovery.