Countries Face Pandemic Fallout in 2021, Risk Analyst Says

During 2020, countries around the world shuttered their economies to protect citizens’ health during the coronavirus pandemic. Countries that dealt with the pandemic better are on track to have a stronger 2021, a leading global risk analyst says.

“Without question, the most important issue is the coronavirus. … 2021 will be much more about the economic response to the crisis,” said Ian Bremmer, founder and president of Eurasia Group, during a virtual summit this week examining major risks for next year.

While countries such as New Zealand are in a strong position to reopen their borders and deploy coronavirus vaccines due to successful containment of the virus, Bremmer said risks abound in the U.S., where more than 15 million cases have been reported.

With the pandemic still raging in the U.S. — more than 200,000 new cases were reported on Dec. 7 — Bremmer said the incoming Biden administration will immediately face a health and economic crisis.

“He will succeed or fail depending on how well he is able to steer the U.S. out of that crisis — get vaccines distributed across the country and internationally. Barring an even larger crisis that is not even on our screen right now, there’s no way that Biden’s legacy won’t be tied to the largest crisis in our lifetimes.”

It’s in part due to that crisis, Bremmer said, that the United States is unlikely to resume its longstanding leadership role as the world’s sole superpower — a position that was largely unchallenged since the end of the Cold War nearly 30 years ago.

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“Does Biden have what it takes (to restore American leadership in the world)? To the extent that my answer to that is no, it has so much more to do with the fact that the U.S. has become so much more divided than any other advanced nation today,” he said.

In addition to domestic turmoil, Bremmer noted Russia will continue to maneuver to create distance between the U.S. and its traditional European allies. Still, a world with a U.S. less willing to exercise its global power doesn’t signal a large-scale retreat, or that a rival such as China will immediately come to the fore to exert influence. America’s willingness to be the local sheriff on the world stage will take a backseat to domestic disputes, Bremmer said, in the aftermath of the most polarizing election in Americans’ lifetimes.

“We know this has been by far the most divisive election we’ve had since 1876,” Bremmer points out. “Ninety percent of sitting Republicans have not accepted Biden as the legitimate winner of this election, even as almost every foreign leader has accepted Biden.”

That dynamic accelerates the perception that China is the world’s largest economy, but Bremmer said the numbers don’t bear that out: The Bureau of Economic Analysis estimates U.S. gross domestic product at $21.1 trillion as of the third quarter of 2020, while China’s 2020 GDP is estimated to be slightly more than $14 trillion.

Even as tensions between the West and China intensify due to factors including Beijing’s crackdown of rights in Hong Kong and Taiwanese alignment with Western nations, Bremmer said a cold war between the U.S. and China is unlikely.

“There is enormous interdependence between the U.S. and China economically,” he said. “I would argue that the incoming Biden administration would view a cold war between the U.S. and China as an American strategic failure. I believe the Chinese government feels the same way.”

And at a time when economic recovery from the pandemic will be paramount, Bremmer sees income inequality in developed nations getting worse in 2021.

“The knowledge-based economy is already doing radically better than it was a few months ago,” he noted. That’s based on the professional classes’ “ability to socially distance (and) work from home. And yet the poorest have had an overwhelming majority of the burden on their shoulders.”

And while some might point to Amazon’s success during the pandemic as an economic sign of hope, Bremmer points to “how many companies no longer exist — how many brick and mortar institutions no longer exist.”

“We know on the back of coronavirus right now that inequality is getting worse, not better,” he said, adding that while China has the economic planning tools to regulate inequality, the same can’t be said for the United States and Europe.

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