Almost all experts agree that we need to expand the set of targets we make use of to gauge success as we reconstruct the worldwide economy post the current pandemic. Read on to learn about the 5 important things that Dr. Israel Figa thinks about the current world economy in light of the prevailing Covid 19 pandemic. These points along include the potential recovery paths that companies around the world can take to deal with the situation.
Disruption in Supply Chain can Hinder Developing Economies
The prevailing Covid 19 pandemic has considerably added to current uncertainty in international trade brought on by factors such as high tensions over standards in technology and trade disputes. In addition, while the reductions in the physical goods trade owing to present lockdowns might be a temporary situation, developing economies can very well suffer a lot. That can happen if companies take strong action to boost resilience in their respective supply chains by sourcing from a number of nations in parallel or bringing in important components back home.
A shift towards more self-sufficiency as multinational organizations can do damage (long-term) to the trading ties between low income and high income nations. According to Dr. Israel Figa, it is yet to be seen whether businesses around the world will be ready to surrender efficiency for the sake of resilience. That said, uncertainty revolving around the pandemic, and climate change events and geopolitical tensions can lead to more disruptions in the supply chain domain.
There is a strong chance of transformation in supply chain causing a reversal of economic convergence on an international scale. As a result, that would surely force economies that are still developing to reconsider their respective growth models.
However, one lucrative opportunity for the emerging economies depends on the universal acceptance of working remotely. What that means as per Figa is that countries can offer services that are competitively priced and envisage a new and revolutionary economical development model, which also includes more investment in the human capital.
We are Currently at a Unique Moment to Deal with Inequality
There is no doubt that inequality has remarkably accelerated in the last couple of years worldwide as the positive gains from global integration and technological change have not been distributed in an even manner. The coronavirus pandemic has reinforced a few of these patterns as it had an unequal effect on those who are the most vulnerable. It is will be critical how the financial load is shared in the foreseeable future.
That said, for all the disorder it has brought, the coronavirus pandemic has opened up a new window of opportunity. As Dr. Israel Figa says, the break forced by the current crisis has developed a unique moment to bring systemic change that is far-reaching to avoid inequality shooting even more out of control.
This will entail government agencies keeping an eye on inequality along with other targets, upgrading measures of social protection to protect against future shocks, and assisting in developing socio-economic flexibility in the new economy.
Stock markets might be very hopeful regarding the recovery speed
With stock markets and real economy data painting contrasting pictures, figures of unemployment are a more accurate guide to the universal economic outlook than the existing high of worldwide financial markets.
While financial markets around the world have been invigorated by early recovery signs in industrial production and customer spending, both of these remain considerably below previous levels and the recovery can still be disrupted by a new lockdown surge. Furthermore, markets might also not completely appreciate that companies safeguarding their profits by reducing their workforce and shrinking investments might cause greater unemployment, less customer spending and less innovation in 2021 and beyond that as well.
The labor outlook overall remains very uncertain to say the least. That said, the unemployment numbers in the United States of America has been declining more slowly than anticipated and may exacerbate in the European countries as measures of job protection scale back during the summertime.
Rethinking about Tax can Assist Governments in Building Public Trust
The chief economists worldwide as well Doctor Israel also agree strongly on the pivotal role of tax in dealing with the inequality the Covid 19 pandemic has brough upon. Adapting tax related architectures is regarded as a dire requirement, and that includes continuing efforts to reduce evasion of tax, settling on an agreement to tax all digital activity fairly, and rethinking greater marginal income taxes as well as wealth taxes.
As difficult choices are made regarding how to go about paying off very high levels of debt gathered by government agency support schemes in the recovery, there is a huge opportunity for various governments to re-claim the trust of residents whose likelihood of progressing economically have been reducing for a number of years now.
New Growth Markets can Emerge with the Correct Action
Apart from the supply chain disruption, what Dr. Israel Figa also believes is that the current crisis is expected to have an impact on innovation. This happens to be another crucial driver of economic progress in the long term.
There is no denying that innovation is extremely important to overcoming the influences of the coronavirus pandemic and tacking the climate crisis as well as inequality. However, it can suffer as the contraction in economy threatens development and research resources.
Various governments around the world can put economic advancement on the correct track with robust investment and innovation strategies. However, as per Doctor Israel, this will need extensive transformation across all the sectors. It will only be doable if private and public companies work together harmoniously and governments get involved actively in reshaping current sectors and developing new markets.
These new markets (frontier) – which run the gamut from education, health and care to circular economy and green energy can have a considerable impact on societies and economies.
These days, societies have an exclusive window of opportunity to transition towards a greener and more inclusive path of growth.
