May 22th, 2021
20 min read
The Past is Prologue - just like other past crises, this one will favor those who boldly adapt and extend their business philosophy and operations.
The COVID-19 pandemic has caused massive disruptions across the spectrum of human activity around the globe. Beyond its immediate impact on public health, the pandemic has reshuffled economies and societies. These shifts have spurred the emergence of several megatrends including, deeper inequality, bigger government, remote work arrangements, deglobalization, and the concentration of market power by tech giants.
The approval and dissemination of COVID-19 vaccines have brightened both public health and economic prospects. Hence, the global economy is expected to continue its recovery throughout the upcoming year. At this critical juncture, it is important to understand that instead of seeking a return to old ways, we should embrace an already unfolding advancement towards a new reality.
The COVID-19 pandemic has placed socio-economic inequalities into sharp focus. It has brought to broader attention inherent inequalities in areas that range from healthcare and education to employment and technology. These disparities are felt along various lines, including income levels and ethnicity. While the pandemic and the response to it may have exacerbated existing systemic inequalities, they have also increased awareness about the need to tackle them.
Throughout the pandemic, governments have increased their spending to unprecedented heights. In FY2020, G20 governments made commitments equivalent to triple the amount allocated in the aftermath of the 2008 financial crisis. While the majority of these funds were dedicated to emergency measures, a portion of it has been pledged to stimulus speeding for reopening efforts.
In some cases, governments have chosen to attach conditions to these pledges. The EU has decided to spend 20% of its fiscal stimulus to accelerate the transition to a green economy. On the other hand, the US administration has chosen to boost small businesses and focused on bolstering diversity and social justice.
This megatrend may have preceded the COVID-19 pandemic, but it certainly achieved its zenith during the lockdown period. From BREXIT, all the way to the trade war between the United States and China, the high levels of uncertainty and the waning influence of the WTO have pushed the proliferation of restrictive and inward-looking trade interventions. These fluctuating dynamics have forced businesses to reevaluate their position in global value chains.
Prolonged lockdowns have fueled the expansion of the digital economy. Technology has facilitated the migration of consumption and social life to the virtual realm. In doing so, it has served as a lifeline for many people. Moreover, this transition has provided an opportunity for agile businesses to gain a competitive edge. For these businesses, the difficulties of Post-Covid strategic considerations are exacerbated precisely by the threat of the compartmentalization of these increasingly critical digital spaces.