The world post Covid-19

A world after furloughs, face masks and fear

The world remains in the grip of Covid-19, but this will not last forever. At some point in the not too distant future, the fear of this pandemic will most probably dissipate through some combination of effective treatments, vaccines and herd immunity. On one hand, Covid-19 has been an extraordinary economic shock. It has been so abrupt, many economies shrank by an annualized 25-40% in a single quarter. It has even caused the deepest global recession in peacetime since the Great Depression.

On the other hand, the pandemic presents an opportunity for change. Decisions made during a crisis can shape the world for decades to come. This could also be a blessing in disguise in uniting efforts to tackle climate change, with the financial system and corporate social responsibility playing a much more powerful role. Since most of the world is now working from home, the move to digital technologies has also been expedited, serving as a catalyst for more dynamic change.

As we elaborate further into this article, regarding a global new order, we are unfortunately not very optimistic. Covid-19 is expected to further undermine the capacity of the US to lead on international economic policy. Additionally, the outcome of the upcoming US presidential election is unlikely to have a positive impact on US-China relations. Deglobalization could continue through a diversification of production away from China, international immobility of people and countries prioritizing self-sufficiency and national security over efficiency. The medium-term growth path for EM has also become more challenging.

For further insight on the world post Covid-19, read our full report here.