HOW 2020 CHANGED OUR ECONOMY — AND WHAT’S NEXT?
“Life has never been the same since 2020.” As cliché as this may sound in the very near future, we’ve all surrendered to the fact that the coronavirus pandemic has affected every corner of our lives, be it professional or personal.
With the shocking speed at which the pandemic has been spreading, staying indoors at all times has become the new normal though people find it difficult to adjust to the quarantine life. According to APA, more than 70% of Americans have experienced common symptoms of depression due to the pandemic.
The good news, however, is that these symptoms tend to naturally recover over time, experts say. But what happens if the same trauma paralyzes our business operations? Well, this question still remains unanswered.
The global business economy has lately been aggressively stabbed by the sharp spike of coronavirus. Companies across industries are continuing to severely suffer from operational, supply chain, and financial challenges due to dramatic revenue drop, global trade and manufacturing decline, high rate of unemployment, and the list goes on.
Over 70% of startups have had to terminate full-time employee contracts since the start of the pandemic (as per Startup Genome). Moreover, global reports say, 2020 has seen an unprecedented shock to the labor markets with the biggest employment decline since WWII.
THE SHARPEST DOWNTURN OF THE CENTURY
The International Monetary Fund (IMF) explains the global decline as worst as the Great Depression of the 1930s. They believe it is difficult for countries to escape the economic downturn as the majority of them are on the brink of recession.
On a similar note, the World Bank opines that the economic activity among advanced economies has faced heavy damage mostly due to their domestic demand and supply, trade, and finance have been severely disrupted, eventually resulting in extreme poverty for millions. However, a partial recovery is expected in 2021, with expected US growth of 4.7 percent, as indicated by the IMF.
Meanwhile, the pandemic demands urgent health and economic policy actions, including global cooperation, to reduce its consequences, protect vulnerable populations, and strengthen countries’ capacities to prevent and deal with similar events in the future.
THE WIDESPREAD MISERY
Although the virus has hit the global economy, the blow is most severe in countries where there is a heavy reliance on global trade, tourism, commodity exports, and external financing.
However, there is a light at the end of every tunnel. Needless to say, the global economy will see better days in the future, for out of every crisis comes determination, urgency, and creativity.
Tourism is one of the worse hit sectors impacting economies, livelihoods, public services, and opportunities in all continents. Many countries still prohibit foreigners from entering the country and closed their external borders.
Though it is impossible to wrap our heads around the damage this has caused to nations worldwide, UNWTO (United Nations World Tourism Organization) estimates spending by international tourists dropped between $910 billion and $1.2 trillion in 2020, which would set the global tourism industry back by 20 years.
However, what is encouraging is that the discovery of the COVID-19 vaccine, elevating hopes for the future of the tourism industry with key action plans and innovative technologies that will slowly rebuild the sector.
Be it commercial or residential, the real estate industry has been facing heavy pressure from COVID-19 since the beginning of the year.
Besides the shift to remote work, which will be permanent for many workers, tenants have been requesting shorter-term leases, rent reductions, and other types of exceptions due to the economic shutdown and global health crisis.
Towards the end of 2020, it has been noted that global office leasing activity is 46% lower than a year ago. There also has been an increasing demand for housing real estate space, rapid urbanization through migration in search of better amenities.
While there is still a long way to go, the brighter side is that the market is getting ready to rebound as we speak. The global real estate market is expected to generate a revenue of USD 4,263.7 billion by 2025, according to a new report by Grand View Research, Inc.
Rapid economic development in the developing regions and countries like India, China, and many African countries has enhanced income levels and helped in the real estate market.
For many countries, e-commerce grew drastically while brick-and-mortar retail suffered awfully. Loss of employment, store closures, operational challenges, and decline in shoppers are some of the key areas of COVID-19 distress.
Presently, companies have begun to re-think their businesses and operating models to survive the present state.
With e-commerce booming like never before, the sector has witnessed the emergence of apps that can facilitate customizable experiences and product recommendations based on consumer traits, activities, and locations. For retailers, the objective is to build immersive retail experiences that take shopping to new heights.
In short, the retail industry is shifting emphasis from features-and-benefits to an immersive experience that prompts customers to ‘go for more’.
Many fintech companies are under major stress mainly due to limited access to capital forcing them to shut down, leaving the industry to larger and stronger companies. Prolonged uncertainty is decreasing the number of fintech startups and gives momentum to the companies able to cope up with the challenges.
Also, early-stage fintech companies saw fewer rounds as investors opt to double down on larger and more mature winners. Q2’20 has already seen an early-stage deal crunch, with mid-stage rounds increasing deal share by 8 percentage points in the quarter as the space matures.
A sustained economic slowdown would reduce consumer and business spending more than what has already occurred. In turn, this would result in lower transaction-based revenues for many fintech companies.
Nevertheless, there is hope. Post-crisis, innovative new products and propositions will become the new normal for Fintech.
Focusing on speed, identifying the risks, building a leaner and more scalable cost basis, financial institutions should be able to create a new normal. They are also required to show resilience to ensure continuity of services and protect their customers at all times.
The New York Times calls the pandemic period, “a damning indictment of a nation,” with the terrible blow it has had on the worldwide education sector.
As a result, schools, colleges, and universities are forced to shift in some way or another to online learning as a replacement for on-site delivery.
It is predicted that some 23.8 million additional children and youth (from pre-primary to tertiary) may drop out or not have access to school next year due to the pandemic’s economic impact alone.
Disruption in education will not only affect the economic condition of a nation, but also increase the risks of violence, crime, and poverty, especially in third-world countries.
In order to mitigate the potentially devastating consequences of the COVID-19 pandemic, governments, stakeholders, and companies are implementing innovative methodologies and technologies across nations; going digital being the primary intent.
Keeping in mind the safety concerns and ensuring learning continuity during the time of school closures, students have opted for distance learning, depending on education level and region.
NEW DIMENSIONS OF LEARNING
With the immersive power of technology, learning and teaching have drastically been revolutionized.
Adoption of newer technology and adapting to it with the aim of a seamless transition from the classrooms to home learning could set new education trends.
Though eLearning has been around for a long time, pandemic time has promoted it to a whole new level. Today, the eLearning market size has grown over $20,000 billion.
In fact, as per the new report by Global Market Insights, Inc., the eLearning market size is set to exceed $375 billion by 2026.
They say, with the rigorous adoption of cloud technology by eLearning companies, content availability related to course materials for educating and training students or employees has surged over the past years.
Presently, companies partner with content providers to offer training and education to employees and students. The flexibility of learning from remote places is propelling today’s market demand. eLearning enables learners to receive more relevant, mobile, self-paced, and personalized content. This can be accessed, consumed, discussed, and shared as one wishes.
In the digital learning space, Artificial Intelligence (AI), augmented reality, gamification, learning analytics, learning experience, and microlearning platforms are some of the key upcoming trends in eLearning.
Whether they are learning technology trends or the learning content trends, the trends will continue to impact the way people learn and organizations benefit from these modalities and interventions.
This phase too shall pass. The global economy hopes for a better future. Almost every business, regardless of size and type, has had to make adjustments to cope with pandemics.
More reliance on modern technology, adoption of new and improved tools, digital strategies — those are the needs of the hour to optimize the present business economy.
Moreover, dramatic shifts in industry structure, customer expectations, and demand patterns will bring in paradigm shifts in operations strategies to create competitive advantage and generate customer value.
The fact of the matter is effective new business models strike the right balance and integrate digital and physical presence. They also call for new levels of visibility, agility, productivity, and end-customer connectivity.
While it is a challenge to sustain this performance, post-crisis, business, and operation leaders should find ways to redefine their operations, build resilience, and consumer-demand patterns.
It’s also time for corporate actions that affect employees, customers, and all other stakeholders. The more value they invest in them today, a fulfilling tomorrow is at hand.
Given the economic downturn of this year, the world has learned to survive through thin and thick without great determination and courage. Every crisis only makes us stronger and as someone wise said, “it is an opportunity to grow and evolve.”