In the past months, no topic has been more prevalent in the business world than expectations for the recovery of the global economy after the worst effects of the pandemic are over. While some analysts and institutions appear more optimistic, others have warned that it may be unrealistic to expect a more positive outlook in 2021.
Despite contrasting opinions, one thing is certain: change is bound to come. According to Fortune, the globalised world, with its highly connected markets, is expected to shift
Into its next phase, though whether or not these changes will be positive, it’s still early to tell.
According to Joao Vale e Azevedo, Chairman of Kunst Global, one of the largest equity firms in the world, it’s hard to know what will happen once the storm passes, but a quick and painless recovery remains doubtful.
“The crisis will mainly affect the cities. Today we can already see the financial districts of many deserted cities, with empty streets and closed shops: the risk is that the situation will not change. After all, companies have got used to remote work which has allowed them to cut costs: why should they go back? But this will mean empty offices, and consequently deserted public transport,” says Azevedo.
Therefore, the whole way we think about urban space will be destined to change, with consequences that may be positive in the long run –– for example from an environmental point of view –– but which in the short term will be very negative. There will be less tax revenue to feed the coffers of the municipalities, which in many European regions have never fully recovered from the 2008 crisis.
These local changes are only a small part of the picture. In a highly globalised economy, with complex chains linking markets together, these changes are bound to affect the big picture, and we can expect international relations to shift in the coming years.
“Interestingly enough, globalism will be strengthened, both economically and politically. With the crisis, the influence of large multinationals will grow even more: and if this is good news for the US and China, for old Europe it is very bad. The world will be characterised even more by the US-China dualism, the cold war for the economic supremacy between the two powers is destined to intensify,” argues the Chairman of Kunst Global.
In this scenario, the European market is in danger of being incorporated. That’s what happened last “Black Friday”, with European consumers who, with shops closed, turned almost exclusively to Amazon. “We would need a strategy to support businesses and the free market by the European Community institutions, but I struggle to see one,” Azevedo warns.
The UK may also suffer even more than Europe, because it will have to deal with the combined effect of the crisis and Brexit without the support of the nationalist presidency of Donald Trump.
“I still want to think positive. As the history of the West teaches, it is precisely in moments of crisis that Humanity has given its best. The crisis will cause a general reduction in costs, and this will create the ideal conditions for investing in innovation,” concludes Azevedo.