Reimagining the global economy with realism

As 2021 progresses, we continue to analyse the impacts of COVID-19 on entrepreneurial and growth driven businesses. From economic shocks and political shifts to digital transformation and new ways of working, the world may be reimagined this year with a balance of realism and optimism. In the latest edition of CEO Matters, RSM Global CEO Jean Stephens talks with Joe Brusuelas (Chief Economist, RSM US) and Simon Hart (International Partner, RSM UK) about what the post-pandemic economy will look like, as well as the opportunities and further challenges that may arise along the way.

Module 1: Pandemic economics

2020 is likely a year that will be etched into the memories of millions of people around the world. The global economy was hit hard by the pandemic and many middle market businesses felt the impact as a consequence. As economic conditions begin to coalesce, the indicators suggest that 2021 will be a much different experience. The global middle market can expect growth and business opportunities to improve as the economic relationship between state and society resets. With the rollout of vaccinations underway, customers and consumers can anticipate returning to normal and therefore prepare to re-engage and re-ignite business while taking lessons learnt forward.

Whilst the opportunities in change are abundant, so too are the challenges. Organisations need to be alert and proactive in responding to both as they look to recover. This post pandemic reimagination will be driven by the increased demand for consumer spending that has built up over the numerous lockdowns. Consumer saving since the start of the pandemic represents $2.9 trillion globally, which has been a serious issue for the global economy. However, as soon as lockdown measures subside and business “as usual” can resume under normal conditions, consumers are expected to begin spending again, aiding recovery significantly.

Module 2: Geopolitics and trade relations

Removing the COVID-19 impacts from the equation, there remain several major political changes that will have a lasting impact on the global economy. In the United States, The Biden Administration has a focus to mend trade relationships in a push to decrease trade tensions around the world.

Similarly, the EU is feeling the effects of Brexit as the minutiae of what the future relationship between the UK and EU will look like continues to unfold. About 80% of the UK economy is in the financial services sector which presents several unknowns as to how this relationship will evolve. The challenge that Brexit presents is in being able to see through the noise generated through the media and assessing what the true outcomes will be, how they will affect the global economy, and how organisations will adapt.

Technological changes to business practices are helping organisations adapt, as digital solutions cement themselves as critical aspects of the new normal. Further digitalisation of working environments presents many benefits; including lower cost implications to office spaces; flexibility for employees in terms of where they work; and how these two factors combine to form the basis of new remote working solutions.

Module 3: Global economic optimism

Naturally, the drivers for change are not just economic but also societal, as organisations must be mindful of their consumer demand and how this will be impacted by any major infrastructure changes that are being considered.

The dramatic changes that we have already seen are showing no signs of ceasing as we move through 2021 and beyond. However, despite massive economic upheaval, the resilience demonstrated by businesses globally is a good indicator that organisations can respond to incoming economic revival with agility and proactivity to continue driving a new way forward.