Post COVID-19 Economic Outlook – A Crisis Merely Accentuates Trends
The COVID-19 pandemic accentuates the already existing trends in the global and Asian economies or markets, both in an encouraging and adverse sense.
Mr. Charlie Lay delivered a keynote speech during a virtual International Talk held by the International Business Program of BINUS BUSINESS SCHOOL – International Undergraduate Program (BBS-IUP). Following the topic Economic Outlook – Post COVID-19 Pandemic, this Singapore-based senior economist shared his insights about the global and Asian economic outlook before, during, and after the COVID pandemic.
He stated in his “2021 – A Year of Transition” keynote speech that the global economy will see some growth rates in 2021, although some will be in the form of uneven recoveries. The global backdrops for the bumpy recovery are, among others, the sudden death of the 11-year-old Bull market, the crisis that accentuates some existing trends, and the tech revolution.
This article will discuss further the accentuation of some trends due to the crisis. They are digitalization, de-globalization, a supply chain revamp, a winner-take-all mentality, income inequality, social fractures, and the worsening US-China tensions.
By definition, digitalization means the conversion of business/activity processes to the use of digital technologies and data instead of analogue or offline systems (paper or whiteboard, for example).
For the last few months, digitalization has soared due to the pandemic, particularly due to social and physical distancing or even lockdowns. Two examples of sectors that show an apparent increase in digitalization are health and education.
Since the end of World War II, globalization has been synonymous with “Americanization”. It means that the United States of America has been driving the global economy. However, since former President Donald Trump came to power, he embarked on a scheme of protectionism, such as trade war, etc.
Protectionism can refer to government policies that restrain international trade with the purpose to support national industries. Meanwhile, the trade war is the result of extreme protectionism in the form of economic conflicts. It is just that the COVID-19 pandemic has accelerated de-globalization.
- The Revamp of the Supply Chain
As a result of trade wars, every country or even everyone is looking to revamp or modify the supply chain. They try to reorganize the supply chain to be more resilient instead of efficient. For example, many American corporations (MNCs) have shifted from making a long supply chain in the cheapest locations to the mindset of building more resilience.
- A Winner-take-all Mentality
Due to the pandemic and thus during the lockdowns, we have seen that the big companies, especially those that are allowed to stay open, are getting bigger and more profitable. In contrast, a lot of small companies only have the option to shut down their businesses. This leads to the next existing trend, income inequality.
- Income Inequality
The income inequality trend has been continuing for the last few decades. Unfortunately, in a sense, the COVID-19 pandemic accentuates this issue, where the rich are getting richer and the have-nots have even less. The de-globalization backlash may also show this symptom of rising inequality.
The uneven recoveries may pose another reason for this inequality. For example, some economic sectors are still suffering from the pandemic, such as aviation, hotel and hospitality, F&B, tourism, and more. Conversely, the tech sector is going really well due to the high global demand for chips and semiconductors.
- Social Fractures – Trumpism
Even though Mr. Donald Trump is no longer the US president, the so-called “Trumpism” is still very much alive. Trumpism is a term that refers to anything that has an association with Donald Trump (and his political base). It can include political ideologies and movements, social emotions, governance style, and more.
- US-China Tensions Have Worsened
Several existing sensitive issues have worsened the tensions between the US and China, such as the human rights issue in the USA, the Taiwan issue, human rights in Hong Kong, the technological sector, the South China Sea & East China Sea, and many more. Moreover, both countries have their own economic plans and policies that are potentially adversarial.
Those are several trends regarding the global and Asian economy that positively and negatively show acceleration or even escalation. Some of them apparently have existed beforehand. It is just the COVID-19 pandemic has accentuated and intensified them. ** (KTS)