Financial risk management, solutions and insights company Fitch Solutions Country Risk and Industry Research (Fitch Solutions) forecasts a strong recovery in 2021, as economic activity is expected to pick up in a "broader and deeper fashion" than this year, both geographically and across individual sectors.

Fitch Solutions expects global real gross domestic product (GDP) growth to rebound by 5.5% in 2021, following an expected contraction of 4% this year.

However, in reviewing the impact of the Covid-19 pandemic on individual industries over 2021, Fitch Solutions believes the most affected sectors this year were oil and gas, and consumer-related industries, including automotive sales and manufacturing, as economic activity dropped, and consumer behaviour evolved drastically amid mobility restrictions.

The mining and metals, and infrastructure, power and renewables sectors, meanwhile, are seeing disruptions to their operations and sometimes delays to project planning. However, Fitch Solutions highlights that the mining and metals sector, for example, will end the year on a much stronger note than what was expected in the second quarter of the year.

Covid-19 is further having a neutral impact on the technology sector, which comprises telecommunications, information technology (IT) and consumer electronics, as well as on the agribusiness sector.

A number of sectors have, however, to some extent had a boost this year as a result of the pandemic, which is particularly the case for the pharmaceuticals, healthcare and medical devices, and the food and beverage segments.

Although Fitch Solutions forecasts growth in 2021 for all the industries that the company covers, it notes that the extent of the recovery will diverge. Outperforming sectors (technology, and pharmaceuticals, healthcare and medical devices) will remain on a very strong footing in 2021, while the recovery for consumer-related industries will also present opportunities for growth.

The infrastructure, power and renewables sectors will be boosted by the fact that governments are still relying on infrastructure investment to support growth, in particular China, as well as by the ongoing acceleration in decarbonisation plans in 2021.

The mining and metals and agribusiness sectors also have a strong outlook in Fitch Solutions’ view, though a number of sectors are expected to experience an incomplete recovery in 2021 when compared with 2019 levels, owing to regional divergences.

The outlook for the food and beverage sector is neutral as the sector has somewhat benefitted from Covid-19-related policies this year, but Fitch Solutions says, “more conventional spending patterns will re-emerge in 2021”.

The underperforming sector could be oil and gas, which Fitch Solutions believes will only see a moderate recovery following a difficult 2020. Global oil prices, production and consumption in 2021 will remain well below 2019 levels, but oil and gas demand will post modest gains in 2021, in particular during the second half of 2021 as the global roll-out of Covid-19 vaccines will see energy consumption rebound in parallel with the global economy.

Fitch Solutions forecasts growth of 4.1% for fuel demand in 2021, a gain of 3.6-million barrels a day but well below the decline of 6.1-million barrels a day that the company had initially estimated for 2020.

The start of 2021 may see some rough patches continue, Fitch Solutions notes, especially with the current regime of increased lockdowns in several advanced economies that were enacted in response to second and third waves of infection of Covid-19.

“We expect that 2021 will be a year of two halves, with the bulk of demand returning in the second half of the year as Covid-19 vaccines become more widespread,” the company comments, noting that the different timing of vaccine adoption, with developed markets seeing the vaccine earlier in 2021 than most emerging markets, “will see fuel demand rebound at varying rates per region”.

Changes to traditional patterns of fuel consumption will also factor heavily in paring back the recovery during 2021, and the potential for work-from-home changes to be more permanent could see sustained lower fuel demand as commuting patterns change.

“We expect higher jet fuel consumption in 2021 as more countries open cross-border routes. Lower levels of air travel will still be seen in 2021, although the sector will begin to return to normal,” Fitch Solutions says.

Domestic air travel will likely return to pre-Covid-19 levels sooner than international travels, with consensus expecting pre-Covid-19 levels to return in 2024, the company adds.