What economic developments will we see this year? And what characterized the economy last year? Thijs Knaap, Chief Economist at APG, is keeping a close eye this year on central bank policies and on the political and economic developments in China.
As the hot topic of both last year and this year, Knaap still wants to have mentioned Covid. “It was simply the driving force behind a great many things in 2021, positive and negative. Lockdowns, the variants popping up everywhere, vaccines, government support measures, working from home, growing inequality and the dissatisfaction with this.” He is therefore curious what the impact of the omicron variant will be. “If we're lucky, the consequences will be limited to mandatory working from home and bankruptcies of cruise lines and corporate air travel providers. If we are unlucky, then we are on the eve of a long lockdown and the question of what all needs to close down to prevent the new variant from causing a lot of casualties again,” Knaap states.
Knaap still marvels at the high earnings growth of companies in the MSCI World Global Index. “Those profits increased by 70% last year. The big companies that are in such an index, despite corona, are doing great. That’s really an unexpected turn of events that’s working out well for investors. It’s an important development, though, because if the big companies weren’t doing well, the economic concerns would be a lot bigger than they are now.”
What Knaap sees as characteristic for 2021, in addition to the profitability of the large companies, is that all hell has not broken loose, although there was every possibility for that to happen. “There is a Sherlock Holmes story in which he solves a crime thanks to a dog that did not bark when it was supposed to. The storming of the Capitol, the tensions in Ukraine, government debts jumping by dozens of percent; all events that everyone said would have enormous economic consequences but ended up only causing a ripple. Maybe that’s because everyone is preoccupied with Covid, but it’s striking.”