Five factors affecting global business after Covid pandemic

The Covid pandemic has had a huge impact on the business cycle of the world. Many small businesses have closed, while some have flourished many times. Now let us see what impact Covid has left on the business cycle of the world.

Uneven economic recovery

As the pandemic is coming to an end, the global business confidence is bouncing back as the GDP of most economies is touching around 6%. Due to stimulus spending by the different governments, consumer spending has gone up. The path of recovery will be very uneven across nations as it depends mainly on the pace of recovery and vaccination drives. It also varies across generations as the virus economically impacts each generation in its way. The online casinos businesses did quite well as people stayed back at home and played.

Rise of public debt

During the year 2020, public debt across various economies has gone up many times. Though the Government is spending stimulus to revive their respective economies, the rise in public debt is not suitable for emerging economies in the long run who may need finance to fund their development projects. An increase in debt may lead to lesser government spending and high finance cost. However, in developing economies like India and Brazil, consumers and economies which are debt-ridden will be badly affected once the pandemic is over.

Reset of globalization

The concept of globalization has witnessed a sea change as every Government raised the issue of nationalism and tried to protect the interest of its workforce. Supply chain management of various items was disturbed as global exports dropped by 7.2% in US dollars. Every Government was trying to control the supply chain of their medicines and essential items. This block of supply bottlenecks hit a variety of industries, both in the retailing and manufacturing sector. The need to protect their interests overshadowed the need for globalization. Since the pandemic is coming to an end, let us see how the rules of globalization reshape its future.

Shift to more value-added activities

The emerging and developing industries are shifting to more value-added activities. In developing countries like India, the contribution of the service sector to the GDP has increased from 49% in 2010 to 55% in 2020. Service industries such as education, hospitality, finance, and tourism are expanding and becoming the main reason for increased income. Growth in the service sector will help the general consumers buy nonessential items or services and help the economy bounce back faster. Among all the sectors, e-commerce is leading the curve as many manufacturing companies are opening their website to reach their end consumer. Consumers will continue to prefer doing e-commerce shopping even after the pandemic is over.

Shifting of market frontiers

The developing and emerging markets will continue to have a significant market share in terms of GDP on a global scale. It has been estimated that by 2040, the contribution of the developing and emerging economies to the world GDP will be 69%, up from 56% in 2010.

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