The World has gone through an unprecedented crisis caused by the Covid-19 virus originated in China and spread all over the World sparing no region practically. The disruption in Businesses, Stock Markets, Oil & Commodities and Foreign Exchange happened in proportions never seen before and in all asset classes at the same time. Margin calls have left most investors poorer by 20-60% and that will have a direct impact on business investments, sustainability & growth. Consumption Patterns and Business Trends will change forever and the old saying-“People have short memories and life will revert to prior times” will not hold good anymore.
US had already started implementing protectionists policies 3 years ago and this current crisis will accelerate that trend for most large countries and regions to go in that direction. Therefore, we all have to relook at our respective Businesses and take immediate measures to ensure sustainability & survival before looking at growth. One can expect global cross border trading volumes to shrink and focus on regional economies of scale and trade will be of immediate priority for governments. Businesses will have to focus on their respective domestic markets and consumption trends. For instance, domestic manufacturing based on domestic demand will be the way forward. Please remember there will be a reset on ‘Expenditure Levels and Consumer Spending’ and businesses & related costs/packages will have to be adjusted accordingly. Use of technology will play a even more significant role in driving economies, businesses and their execution strategies. Economies with Natural Resources to fuel Manufacturing sectors aligned with domestic demands will benefit with the new trends. Demand for Travel & Commercial Real estate will drop drastically as this crisis has taught us to work from home effectively using technology. Luxury items will take a back seat till lost wealth is recouped over the next 5-7 years.
Focus on tech driven businesses as well as essentials, healthcare & wellness and knowledge sectors.
Author: Achal Ghai – Group Managing Director of Legacy Emirates Group