The coronavirus changes the world of trade and investment

With economies that contribute more than 70% of world GDP in recession and trade and investor flows paralyzed, globalization is being put into review.

 

Many of the executives and managers of companies around the world have in their recent memory the harsh effects of the international financial crisis of a decade ago. They are also aware that each episode of turbulence, at the end of the business cycle, especially if it is abrupt and unexpected, such as the current one and the one in 2008, opens a phase of agony that requires private firms to adapt urgently to the harsh conjunctural conditions and, also with unusual speed, take advantage of the moment when the activity takes off. The added problem that the coronavirus crisis creates is the absence of a reliable calendar for economic revival, which, on this occasion, must be accompanied by a demanding process of rebuilding growth patterns and reconversion of industries, sectors and companies. Because it seems that nothing will be exactly the same and because, as the multilateral institutions emphasize and the market consensus openly recognizes, the exceptionality of this recession requires exceptional recipes and solutions. The exit from the pandemic will be complex, with uncertain consumer behavior, production rhythms that will operate in fits and starts, with resumes and shutdowns and new and demanding health protocols that prevent replications of infections once the death and infection curves stabilize. the pandemic.

The diagnosis is from The Economist . The British weekly stresses that the private sector is fighting a pandemic that is also invisible in the economic field. With giants like LVMH, the Parisian fashion emporium, which have started to manufacture disinfectant gels for sanitary use, General Motors, which has derived its production lines to build respirators and Alibaba, which distributes masks all over the planet. While large distribution firms compete to have their stocks with enough products to meet the basic needs of citizens. But few of them have disclosed their calculations on the financial damage that the Covid-19 crisis and the freezing of their businesses will inflict on them.

It is true that it is not the first time that companies face phenomena like the current one. In the last recession, two-thirds of American multinationals experienced declines in their sales. In the worst quarter of the US GDP contraction, they fell 15% year-on-year. In the Great Pandemic, the setbacks will exceed 50% as a general rule, in view of the stress revealed by the indicators that measure the purchasing power of consumers and investment of companies. Or the collapse of the demand for oil with markets such as the US with episodes of negative prices per barrel, because they cannot store more crude stocks. But, above all, due to the uncertainty involved in the recovery, from which the theory of an asymmetric V takeoff still holds, a shorter lag and prone to a pace of activity that can promote the cruising speed of the post-Covid business cycle. But the interim is tricky.

coronavirus recession

Information from The Economistheralds a new world for trade and investment. From the cascade of bankruptcies and the breakdown of production and supply chains. H&M, the Swedish clothing giant, has asked its workers to request early vacations to buy time and evaluate the losses of its sales centers and the formula for resuming its stagnant factories and its foreign distribution channels. From Italy, for example, a large part of its exports have been canceled, from cheese to turbine components for the aeronautical industry. And China, the great global bazaar and the great world exporter is still far from restoring its merchandise flows. Almost all of the global private sector has monetary, commercial and, therefore, accounting difficulties. In the past two recessions, nearly one in ten credit-depressed businesses went into default.

SMEs are the ones that will suffer the most. There are multinationals, such as technology companies, that have even seen their demands rise. But many of a medium or small dimension will have to close. At least temporarily. In the US, 54% of them are seriously considering the option, and in a short period of time. Some of which, in addition, have paralyzed their objectives of going public. Amid complaints about the delay of governments in delivering official aid. In the US, the UK and several EU countries. By mid-April, only 1.5% of the $ 350 billion in US Treasury subsidies to its SMEs had reached their owners’ accounts. China, the origin of the pandemic and the first country to reestablish a certain productive calm, is still operating at 70% of its capacity. Because, like the whole planet, Before, they must reconfigure their production chains, with the financial muscle they have, to, at the same time, gain competitive advantages in the race of the digitalization era and meet the rules of distancing between employees who operate in their manufacturing structures. Without deviating from production targets at full capacity. Monitoring changes in consumer tastes and trends; in short, their preferences, especially in digital ecosystems. And giving prominence to telematic meetings. Monitoring changes in consumer tastes and trends; in short, their preferences, especially in digital ecosystems. And giving prominence to telematic meetings. Monitoring changes in consumer tastes and trends; in short, their preferences, especially in digital ecosystems. And giving prominence to telematic meetings.

This is why the intentions of trying to keep your templates afloat are so important. It depends on this that your strategic plans are fulfilled. But also from their investments in technology. Because the planet is advancing at forced marches in e-commerce, digital payments, and remote work. Also, most of the medical innovations that the fight against Covid-19 demands, the possible vaccines, depending on the latest generation technologies, Big Data and Economic Analytics procedures. Artificial Intelligence will inexorably be at the forefront of immediate private-sector navigation. As well as, secondly, the future demands in terms of production and distribution. The value and supply chains will have to be reinvented. In a rush and after long months of trade wars and increased tariff barriers. Apple has even admitted that its inventories have barely had a supply guarantee for ten days and its main supplier in Asia, Foxconn, 41. The use of automated factories, advances in robotization of value chains is already a reality. Few companies will be able to escape if they want to prosper in their markets. In an atmosphere of low propensity for capital flows. Some calculations speak of decreases of 30% and even 40% of business investment this year.

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