Reuters / Lucas Jackson
- We won’t be going back to the way things were after the pandemic.
- HSBC Global Research, an independent analyst division within British investment bank HSBC, published a 17-page predictions report on how the pandemic will ultimately reshape the global economy and alter corporate workplaces.
- Business Insider compiled a list of the three main takeaways leaders need to know.
- Click here for more BI Prime stories.
The impacts of the novel coronavirus is long-lasting, and HSBC analysts predict it’s not just going to change the way we do business — it will also alter society as we know it.
HSBC Global Research, an independent analyst division within British investment bank HSBC, recently shared a 17-page predictions report on how the coronavirus pandemic will reshape the economy, impact workplace relations, and redistribute global supply chains.
The firm has over 350 analysts in 24 countries who specialize in pinpointing market trends across the globe, according to the company’s website. Based on data comparisons between the current climate and previous global crises, HSBC drew conclusions around what’s going to happen in the post-pandemic era.
“Those countries unable to successfully impose lockdowns — whether through financial or social-distancing constraints — will probably end up with more in the way of economic ‘scarring,'” Stephen King, senior economic advisor at HSBC Global Research, wrote in the report. “Those countries able to keep their businesses on life support for longer may build more effective ‘bridges’ to the future than others.”
Business Insider analyzed HSBC’s report and compiled a list of the three most important notes leaders need to know about the long-term consequences of COVID-19. The data in this briefing is based on numbers provided by the European Center for Disease Prevention and Control, UK government bodies, World Economic Outlook reports, and HSBC’s corporate partners.
Here are the main takeaways from the report, and what they mean.
The pandemic has accelerated de-globalization efforts
Courtesy of HSBC
The US, for example, has implemented travel restrictions on foreign nationals entering the country from China, Iran, Europe, the UK, and Ireland. Additionally, the Centers for Disease Control and Prevention (CDC) also recommended that Americans stay indoors and avoid nonessential travel throughout the country, Business Insider previously reported.
But even when domestic travel lockdowns come to an end, it’s likely that countries will distance themselves from one another as a means to prevent a second wave of reinfection, HSBC noted.
This will be especially detrimental to the transportation, aerospace, and tourism industries, as the volume of commercial flights has collapsed since March 13.
Most countries will remain hesitant to open up international borders, but developing nations that can’t afford the economic downturn caused by coronavirus will have no choice but to reopen, the report noted. King also shared in an HSBC video call that countries will have a mounting distrust toward international organizations as a result of further isolating themselves after the pandemic.
Economic activity will be permanently lower than it would’ve been if the coronavirus pandemic never happened
Courtesy of HSBC Global Research
“It’s becoming increasingly accepted that the rebound we’re likely to see — no matter if it’s V-shaped or U-shaped — will not take us back to the level of economic activity that would’ve been in place had it not been for COVID-19,” King said previously.
He explained that countries will experience an overall lower gross domestic product (GDP), a commonly used calculation that measures economic health among countries.
As a result, public debt will also soar higher than it did before, according to the report. Small and medium-sized companies may prefer to go out of business than have to take on additional debt, which would cause more workers to lose their jobs after the pandemic.
Global debt levels will also rise after the pandemic. Most governments borrowed their way out of the Great Recession, as debt levels were already high before the coronavirus outbreak due to the financial crisis in 2008, the report noted.
Major tech advancements will shorten global supply chains
Courtesy of HSBC Global Research
The workplace will be different after the pandemic.
For starters, HSBC predicted that office spaces and physical meetings will decline. Companies will depend more heavily on virtual meetings and digital collaboration as a means to reduce travel costs and coronavirus infections. The idea of a daily commute to work might become a thing of the past, and remote-work trends will most likely stay after the pandemic.
“This will both reduce costs for companies and limit the business risk associated with heightened restrictions on the cross-border movement of people,” King wrote on the company’s website. “In both cases, there is likely to be a significant and lasting climate ‘dividend.'”
While COVID-19 has severed global supply chains in most sectors, he added that companies have leveraged technology to shorten and move supply chain locations closer. While technology made us more interconnected with one another, it can also be a driving force that separates us, according to the report.