Daily Brief: The World Bank Slashed Its Growth Forecast For 2021, So Buckle Up

Daily Brief: The World Bank Slashed Its Growth Forecast For 2021, So Buckle Up

about 3 years ago3 mins

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The World Bank didn’t just lower its global economic growth forecast for 2021 on Tuesday: it warned we could be rushing headlong into a “lost decade”.

What does this mean?

Every six months, the World Bank releases a report on the state of the global economy and makes its predictions for what’s next. And this time around, it said the economy will grow by 4% in 2021 – down from June’s 4.2%. That might sound small, but dig a little deeper and the damage is massive: the organization cut its outlook for US economic growth by half a percent to 3.5%, and the eurozone’s by almost one percentage point to 3.6%. Still, in what’s quickly becoming a habit, China managed to buck the trend: the World Bank upped its growth forecast to 7.9%.

The World Bank predicts the global economy will grow 4% this year

Why should I care?

Zooming in: Your guess is as good as theirs.

The World Bank did acknowledge that this would be a year of “exceptional uncertainty”, so it also presented some other possible scenarios. If, say, vaccinations arrive more slowly than expected and governments buckle under the financial strain, the global economy might only grow by 1.6% this year – if not fall into another recession entirely. If, on the other hand, vaccines are rolled out quicker than expected and countries get back on their feet pronto, economic growth could climb by as much as 5%.

The World Bank predicts the global economy will grow 4% this year

The bigger picture: Lost and found.

To add insult to injury, the World Bank also pointed out that the pandemic’s likely to drag down growth all decade. Ongoing uncertainty and weak growth expectations could, after all, discourage companies from investing in new assets or tech, while lasting unemployment and school closures could lead to a drop-off in skilled labor. The World Bank reckons these challenges can be overcome, mind you – as long as governments spend big on infrastructure and push through employment-boosting reforms.

Keep reading for our next story...

Buffett-Backed Carmaker BYD Is Outselling Its Startup Rivals

BYD image

Buffett-backed Chinese carmaker BYD announced it sold 250% more electric vehicles (EVs) in December than the same time last year – more than three of its biggest rivals put together.

What does this mean?

BYD delivered almost 20,000 passenger EVs in December – far more than Nio’s 7,000, Li Auto’s 6,100, and Xpeng’s 5,700. That makes it China’s EV frontrunner, even if it still has some way to go before it catches up with the world’s number one: Tesla reported 500,000 deliveries for the whole of 2020 – almost four times more than its Chinese rival.

But if anyone can compete, BYD can: the carmaker already has a firm foothold in its home country, which is the biggest car market in the world and has some ambitious carbon neutrality targets. That might be why China’s expecting “new energy vehicles” – think EVs, hybrids, and hydrogen-powered vehicles – to jump from 5% of all current new car sales to around 20% by 2025.

Tesla delivers nearly 500,000 vehicles in 2020
Tesla delivers nearly 500,000 vehicles in 2020

Why should I care?

Zooming out: Wahey, Norway.

No matter how important China is, Norway’s still leading the pack when it comes to electric vehicle adoption. Just over half the new cars sold in the country last year were electric, setting a new record. And it’s aiming for bigger and greener things, targeting a 2025 deadline to stop selling diesel and petrol cars altogether.

Norway new car sales

For you personally: Start your engines.

Batteries are by far the most important and most expensive part of EVs, meaning it’s not just the carmakers themselves that stand to profit from the electric revolution. So if you think EVs have a bright future, you might want to invest in the commodities used to make the batteries, or in the companies that have cracked next-generation battery technology.

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