Platon Finance’s economic outlook for 2021 and 2022 markets
“Every threat can ultimately become an opportunity”
Summary – economic outlook
Platon Finance expects the years 2021 and 2022 to present a major challenge, in particular due to the global impact of the COVID-19 pandemic on society as a whole. However, this threat may prove to become an opportunity to shift the paradigm towards a more sustainable, digital society based on collaboration within local communities.
The crucial question will be whether there will be another wave of coronavirus if its mutations spread, as well as another wave of economic lockdowns. The reaction of central banks and their possible further support for entrepreneurs and individuals will be crucial as well. The markets expect the policy of quantitative easing to be continued by both the ECB and the Fed.
There is an expectation of further bankruptcies of small and medium-sized companies, who will not be able to respond to changing conditions, which will increase unemployment rates, especially in areas that deal with tourism, hospitality, travel and culture.Rising inflation can be expected as well, but also rising stock prices for technology and pharmaceutical companies, which have been able to adapt and offer what is now in the greatest demand.
The International Monetary Fund is improving its economic outlook for the global economy this year, and expects a decline of 4.4%, while in June it predicted a decline of 5.2%. However, in its report, the IMF warns that the pandemic recovery process will be slower than originally planned. The reason for improving the outlook is more favorable developments in the second quarter in some successful countries, while developments in developing countries are lagging behind.
The Covid-19 pandemic caused both the fastest market fall in history and the fastest recovery, driven by unprecedented monetary and fiscal policies. However, despite massive government stimulus and subsidies, the global recovery is still uncertain. In times of uncertainty, investors are looking for opportunities to diversify your funds and alternative investments, such as gold or digital assets.
Situation in the Czech Republic and the EU
According to the latest reports, the Czech National Bank is preparing to raise interest rates this year. There will be parliamentary elections in the autumn, which are likely to add to the uncertainty of domestic investors and markets.
The Czech National Bank expects the public finance deficit to grow to 6.5% of GDP this year from the following estimated 6.1%. The deficit is expected to be around 5.6% next year. The CNB thus slightly worsened both estimates. According to estimates by the Ministry of Finance, Czech public finances will end up with a deficit of 6.6% this year. The total debt that the Ministry of Finance expects is at 43.3% of GDP this year. The Ministry of Finance did not provide an estimate for next year. The EU normally requires a deficit below 3% and a debt below 60% of GDP. According to Deloitte reports, Czech Republic will probably not reach the pre-pandemic values until 2023.
Expected development of digital currency prices
Bitcoin is currently sharply strengthening and attacking its highest price level of over 48,000 USD. The reason is the entry of institutional investors, which started to take place last year. The last major investor, Elon Musks’s Tesla, recently reported that it bought bitcoins for $ 1.5 billion, which pushed the price of Bitcoin soaring. Bitcoin thus shoot up by more than USD 10,000 in 24 hours, followed by other digital currencies to some extent. This growth trend will continue on crypto markets, with greater volatility in both directions, as it is still a young and small market.
The main influences for the growth of digital asset prices will be besides the entry of large institutional investors into Bitcoin and subsequent demand of retail investors, also the continuing demand for greater digitalisation of companies, the transition to online payments and the growing popularity of online shopping as cash payments are now percieved as a higher risk payment method.
Due to the above-mentioned effects, the economic outlook anticipates that further strengthening of digital assets can be expected, including an increase in PlatonCoin prices.