Global economies after COVID-19

by Tom Warneke
First published 20th April 2020
Global | Understanding Your World | Resolving Incidents & Crisis

Primarily a health crisis, the global Coronavirus pandemic also has extreme economic implications and consequences — both currently as we make our way through but also longer lasting impacts for many decades to come.

Our global economy was already facing challenges before COVID-19. The big question stands: how do we restart the global economy once all this is over? While few people profess to hold the answers, there’s a number of factors that will impact economics moving forward. We detail what we’re thinking about below.

Prioritisation

Failure of businesses, loss of jobs, structural issues affecting many industries are all factors likely to impact our economies not to mention a socio-economic rebalancing whereby as national societies and a global one, a radical rebalancing of priorities may be in order.

Global Debt

Simply put — the biggest question of the moment is Who pays for all this COVID-19 response and recovery? Beyond that, how is it being paid for?- Taxes? Borrowing? Inflation?

Migration

Being a global problem, not only does this crisis affect first world nations but also those nations in the developing world. This may well see an increase in refugees and migration as people seek safer locations or better health systems.

Demographics & Class

The older demographic of the population (those perhaps with a larger safety net, more assets and more savings) have a different set of priorities to the younger population. The older populous don’t necessarily want to prioritise economic recovery over immediate health needs.

People are already concerned about their businesses, their jobs, their schools and their savings — preparedness now is key so that when governments give the signal to restore and recover to ensure it doesn’t allow for trade and globalised economic issues to proliferate.

Globally now, people are moving to a “just in time” model of fiscal responsibility. The average household in the UK has less that £1,500 in emergency funds, the average US household has less than $1,000. While this might be plausible in a constantly thriving economy, Governments will no doubt need to step in to assist people in their times of need.

Global Relations

UK Secretary of State for foreign affairs, Dominic Raab, has recently said that relations between China and the rest can’t continue in the same way post COVID-19.

Countries are frequently finding themselves being crushed between the major economic powers of the world (the United States, the European Union and China). Economists with a pragmatic view would suggest this shouldn’t and needn’t be a choice — why choose to trade with only the biggest or second biggest economy when really, free markets and free trade should allow for trade across the board.

Supply Chains

Efficiency of supply chains by definition lack resilience. The global dependancy on international trade, particularly exposure to China means business in the future may look for a multitude of protection mechanisms.

This could mean on-shoring or it could be diversification of supply in order to have multiple mechanisms and pipelines for global trade and production.

Protections & a basic income?

Given the slew of protections being developed by governments around the world, the question of wealth redistribution and a guaranteed basic income is back on the table in many major nations.

While currently being rolled out in the likes of Australia, the UK or many European nations, fiscal protections may well outlast the virus as people see a need for universal protections.

Overall

It’s likely that we’ll all be living within COVID-19 for the next 12 to 18 months at minimum. Even with a vaccine, complex conditions globally remain.

It’s still wildly unknown in what conditions economies around the world will need to restart. Will there be a vaccine or will we be asking people to venture back out into the world in an unsure environment? While a restart sooner is undoubtably better than latter, the reverse is true for the health factors.

Many of our clients globally are already engaging with us as they determine how to monitor the situation whilst continuing their operations and keep their teams and operations safe.

We’ve setup a hub on our website to help our clients track the situation as well as access the latest in analysis as well as advice from the World Health Organisation — find us at www.complexglobal.co/covid-19

We’re helping our clients through monitoring and analysis of the situation via inCountry as well as our local, regional & global analysts and experts as well as our crisis response and emergency management provisions — ensuring our clients are assisted in their time of need.

If you have concerns about your current operations and the risks to your team or your business or if you feel you need a more developed understanding in the current situation and what might help you be better prepared, our team is able to assist. We have an expansive team in most regions with access to the latest information and analysis as well as scenario planning and support. To find out how we can support you, our team can be reached at coronavirus@complexglobal.co