The COVID-19 pandemic has brought economic activity to a near standstill as countries imposed tight restrictions on movement to halt the spread of the virus. The word unprecedented has been used a lot to describe the pandemic’s impact and continues to have on economies across the globe. While that word may seem overused, as the health and human toll grow, the economic damage is already evident and represents the largest economic shock the world has experienced in decades.
2020 was, without a doubt, an extremely turbulent year for the global economy, with lockdowns, sharp trade contraction, accelerated job losses, and supply-chain disruptions. Recovery started picking up towards the second half of the year with the easing of COVID-19 restrictions. The global economy nonetheless experienced a very deep 2020 recession.
COVID-19 has severely impacted businesses and the economy. Throughout the crisis, many companies responded to accelerated digital adoption and changing consumer needs with short-term solutions. As the shift to digital is here to stay, now is the time to assess what this means for the remainder of this year — and into 2021. Digital tools have been a lifeline during the lockdown and they will be a catalyst for the comeback. But what else will be key during this time? We have five predictions for this post-pandemic economic recovery to help you focus your strategic efforts and drive renewed growth for your business.
Recovery is the keyword in 2021, with continued easing up of restrictions, vaccine administration, and demand-side revival. Global growth is expected to accelerate to 5.3% in 2021. The pace of recovery is expected to be much stronger for the group of emerging markets and developed economies, especially supported by high growth rates for China and India.
Driving Higher Economic Growth
The world is changing around us, and we need to take that into account in terms of the way we think about our growth outlook. The biggest risk to economic recovery is a lack of growth, says New York-based economist Dr. Dambisa Moyo. She notes that not only will low growth prevent the funding of critical projects, but the impact will also see more disaffected people, a lack of trust in institutions, and short-term public policies.
Therefore, in an increasingly internationalized world, a global effort is needed to stimulate growth. It is crucial to acknowledge sectors of the economy have been impacted in different ways and some will take longer than others to recover. Now is the time to make sure we are reforming the supply side of our economy through business investment incentives and individuals to upskill, to be able to come out of this stronger and better.
Below are some key initiatives that the government institutions, policymakers, corporates, and individual stakeholders can take:
- Find new openings to build resilience through ‘health proofing’ and diversifying economies.
- Build and strengthen innovation ecosystems from state, business, and academia-led R&D to commercialization, startups, entrepreneurship, and VC.
- Invest in inclusive growth and unlocking the maximum productive potential of all people in communities.
- Lead a skill and talent revolution – both digital and knowledge-based skills to ensure that they have a place in the post-pandemic economy.
- Thrive to make cities citizen-centric, by providing efficient and high-quality public services, updated public infrastructure, and more affordable housing.
Digital transformation for economic recovery and business growth
With 2021 bringing no clear endpoint to uncertainty, businesses will need to shift their focus from short-term solutions to long-term digital transformation. Consumer behavior is already predicted to have permanently shifted more in favor of online shopping, making customer journeys more virtual whilst consumer needs and interests evolve quickly.
Capturing this changing demand requires organizations to fundamentally rethink their business models; structuring for agility, upgrading technical capabilities, and prioritizing data-driven decisions. Smarter automation and measurement can be especially useful tools to capture fluctuating demand and gain higher value from your marketing spend. Digitally mature companies can gain an edge in building long-term customer relationships by using first-party data strategies based on the transparent value exchange framework. By structuring teams to be alert and responsive to changing consumer needs, it can be possible to stay competitive in these dynamic times.
The global acceleration of digital adoption has only heightened the need for digital marketing maturity. Businesses that use this moment as a catalyst for digital marketing transformation, will not only be more agile in responding to markets today but will have a more sustainable framework for the future.
Apps – a bigger driver for economic growth
Apps have become more present in our lives than ever before. They have allowed people to stay connected, healthy, and informed while being safe at home. At the beginning of 2020, time spent in apps grew 20%, as much of the world’s population was under some form of lockdown. As we work towards economic recovery, apps will allow businesses to improve service and customer satisfaction while maintaining social distancing and lowering costs by more accurately predicting sales through advance orders, for example.
Take a look at Starbucks. The coffee company has been able to open stores and maintain social distancing by utilizing in-app ordering. Investing in their app allowed the chain to reduce in-store waiting time and alleviate lines at peak hours. They are even shifting physical locations to a model focused on ordering within the app, making it easier for customers to get their coffee with a smaller physical footprint. On top of enabling social distancing, app orders generally lead to 37% higher spend for retailers. Fintech apps also saw a huge surge during the lockdown, like cash, ATMs, and branch usage dropped by 60%. This created an accelerated digital adoption in financial services, driving a 72% rise in the use of FinTech apps.
Brands from across verticals can help consumers during the economic recovery by investing in their app presence. It’s important to do this strategically, rather than replicating a website experience, to add additional value for consumers. For example, by adding helpful functionalities such as remote check-in in hotels and rewards programs. That way customers can interact with their favorite brands easily, often, and in new ways.
Fundamental to building a robust, reimagined post-pandemic economy is keeping in mind the continual objectives of productivity improvement and inclusion.
A post-COVID world is likely to see the global economy become less integrated as a result of trade barriers, reshoring of supply chains, and reduced labor migration and foreign direct investment. The individual resilience of businesses and workers during the unique and devastating COVID-19 crisis has been inspiring. Government authorities, business leaders, and stalwarts across all sectors can take the opportunity to reimagine not just their economies but also how they could work in sync to become far more resilient, flexible, and prosperous.