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One of the country’s leading economists has predicted that 2021 will be the year of economic recovery as the world grapples with the fallout from the COVID-19 pandemic.

Craig James, chief economist at CBA securities brokerage CommSec, said locally the RBA has done a lot to reduce the impact the virus has had on Australia’s employment levels.

“Borrowing costs for Australian homes and businesses are rocketing, fueling the housing market recovery, while encouraging companies to invest and hire workers.” Mr. James said.
Shoppers outside of Westfield in Chatswood. The government of New South Wales has announced that from Monday the use of masks will be mandatory in many enclosed spaces such as shopping centers to stop the spread of the coronavirus. Photographed in Chatswood, Sydney on January 2, 2021. (Dominic Lorrimer)

“The policy is primarily focused on job creation to reduce scars on the labor market.”

Globally, he predicted that a Biden presidency should bring economies back to pre-pandemic levels within 12 months.

“Investors expect US President-elect Biden to announce a stimulus package of at least $ 1 trillion, which could boost US economic growth, returning the economy to pre-pandemic levels by the end of 2021,” he said James.

President-elect Joe Biden received his first dose of the coronavirus vaccine on live television as part of a growing effort to convince the American public that vaccines are safe.
President-elect Joe Biden received his first dose of the coronavirus vaccine on live television as part of a growing effort to convince the American public that vaccines are safe. (CNN)

“As president, Joe Biden could introduce stricter financial regulation and impose antitrust measures on big tech companies.

“His engagement with China on trade issues will also be a key focus alongside his foreign policy goals in the Middle East. This is of particular importance to Australian companies and investors.”

Of course, many of their predictions hinge on a successful and widespread launch of the COVID-19 vaccine, the tool that is seen as the catalyst for economic recovery.

Merseyside police officers stand guard next to a closed carousel after a dispersal zone was introduced to prevent people from gathering for an illegal party on December 31, 2020 in Liverpool, UK. New Year’s Eve celebrations have been reduced in the UK this year due to restrictions from the Coronavirus pandemic. With most of the UK at levels three and four, socializing is off-limits. (Photo by Christopher Furlong / Getty Images) (Getty)

“Europe and the United States are currently experiencing second waves of the virus, bringing the number of cases to record highs and necessitating further closures,” said James.

“The good news is that an effective vaccine is expected to be distributed around the world, and vaccines are already starting in the UK. And treatments for the virus are also being developed.”

“The economic outlook will clearly be dictated by the virus and how quickly vaccines can stop the number of cases and allow economies to begin to repair themselves.”

We are unlikely to see interest rates move from all-time lows in 2021. (AAP)

The economist also predicted that Australian interest rates will remain “super low”, which means that we are unlikely to see another cut in the next 12 months.

Rather, he anticipates that the RBA will focus on other fiscal policies to respond to the ebbs and flows of the local economy.

“While monetary policy was once about adjusting interest rates (or the price of money), that is no longer the case.” he said.

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