Recovery from Covid
Lim Yau Boon

Lim Yau Boon

Who will be the winners in the post pandemic economy?

COVID-19 is disrupting the economic landscape. The pandemic is forcing some industries to change permanently, companies to transform their business models to survive, jobs to disappear, and workers to re-skill to take roles in new sectors. The International Monetary Fund (IMF), recently reported that the global economy could shrink by 3% in 2020.  But when will the economy recover and who will be the first to survive?

Economic recovery depends on the pandemic’s progress, with the best-case scenario being signs of revival by the fourth quarter of 2020. However, this assumes that COVID 19 is under control globally in the next one to two months. If a second wave of infection occurs, the situation will remain depressed until the end of the year, if not longer. However, large Asian economies, like China, for example, are starting to show fairly strong signs of recovery, which does provide hope for 2021.

When glimmers of recovery appear, some industries will recover faster than others. Currently, several are even already back to their pre-coronavirus levels without the elimination of the infection, at least in terms of their stock prices. Some are even benefitting from the situation. These include certain parts of the tech sector, which are not missing a beat, including software and service companies, for example, Microsoft teams and Zoom; and consumer staples including supermarkets, which have also experienced blow-out quarters in terms of earnings.

With the disruption caused by COVID 19 creating new norms, those sectors that drive the adoption of these new norms will also benefit faster. For example, Telco and 5G related businesses and companies that support online business, home-delivery, e-payment and logistics warehousing. Also, with the emergence of a healthier earth focus, those sectors supporting a cleaner environment, like electric vehicles and energy-efficient programmes, will experience faster growth.

There are also some industries that appear to be surviving well, but a second derivative impact would challenge this, for example, in finance. This sector has experienced good transactional volumes, but a continued slump will severely impact their customers. If, for instance, tourism, hospitality and business travel, highlighted as the slowest industries to recover, face a sustained global travel lockdown it will be catastrophic. If hotel owners and travel firms suffer even further downstream, it will bite the financial sector hard in terms of bad assets. Oil & Gas is also a worrying area with demand completely shutting down, having a knock-on impact on other parts of the economy.

With any disruption, there are winners and losers and the most important thing for any organisation is to stay ahead of the curve to survive, not just COVID 19 but also new disruptors in the future.

“Industries will see more disruptors coming along the way because new norms will have new opportunities but also less job availability for those that have been retrenched.  So, while the big boys are fighting out the Covid-19 fire, we should see a real group of disruptors coming in.” Yau Boon.

Read our next article from the webinar about how companies can stay afloat during this crisis.

 

For more in-depth information listen to our recent webinar ‘Recovery from COVID 19: Where do we begin?’ on 6 May 2020, as part of our Future Ready Series, and organised in conjunction with AusCham. The panel if speakers included Timothy Wong, Regional Head for DBS Group Research for Asia; Malek Ali, entrepreneur, Fi Life; and Yau Boon Lim, Senior Partner, Disruption Management, Lim-Loges & Masters. This is the first of a series of articles from extracts of their discussions.

 

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