Containment Economy

Nowadays, from tycoons and multinationals to stable-job workers, there's something in common: they are ready to spend, but uncertainty stops them. A 'moment of calm' before reactivation, the hope of many.

Regardless of the size/type of business where you work, have you recently noticed an increase in closing deal proposals development, which at the same time are awaiting internal approvals and alignments within the potential client?

You are not alone... at the end of the first quarter of this year, 57% of financial, purchasing, and human resources managers, according to Deloitte, are confirmed "reluctant to approve budgets in the face of high uncertainty."

A year ago, at the beginning of the Pandemic - Lockdown - Recession, business uncertainty was around 39%. Why does the existence of a vaccine seem to decrease confidence?

The answer lies in the fact that mobilizing the initial impact of Covid-19 was a simultaneous global effort. In two months - January 23 to March 21 - practically all nations went into quarantine, while the 'exit' process will be so granular that even within a city, there will be multiple realities, causing public/private decisions to stand still... in a strategic planning paradox where the world panorama seems more evident in four years than in four months.

This uncertainty is far from a lack of resources... billionaires have 58.7% more money after the pandemic (Forbes), leading corporations in the United States and United Kingdom have 'stopped' 1/3 of their execution plan for 2021 (The Economist ), and the 'magic' number: By the end of March, households globally had accumulated $ 5.4 trillion in extra savings, equivalent to 6% of global GDP, according to Moody's.

Uncertainty is about implementing the physical and mental 'return' to realities, habits, and routines that existed before and the challenges they imply vaccinations tipping point.

A good example will be the return to offices, where companies will execute intricate plans where local pandemic realities, employee role, and the needs of pleasant work environment will make -among others- that in a single corporation, there will be 'Endless options,' not to mention that 1/3 of office workers are willing to 'negotiate their salary in exchange for staying remotely,' according to Bloomberg.

As this case is practically everything... return to education, develop events, activate safe hospitality, be able to go out to party without being judged for it, change residence, go to a soccer game, or create a business.

It appears that the global economic system is 'waiting' for four 'milestones' at the end of this quarter to boost spending at all levels:

1. That the cash flow decreases, knowing that since December, there has been liquidity to sustain efficient operations.

2. The arrival of mass vaccination to the world's major economies, where Europe does not start, and the United States sweeps.

3. Achieve the implementation of the 'Covid Passport' or a simile that manages to generate a reopening of borders with greater security.

4. Officializations of tax reforms that many of the countries will implement to remedy the impact of the pandemic.

As time passes, two phenomena increase: how the gap between developed and emerging countries widens, from sanitary restrictions and the economic reactivation model to housing prices. For the World Economic Forum, in this sense, society is "going back" twenty years. A migration of Latino entrepreneurs and talents is "just around the corner."

And the mental effect: an emotional tension that some experts define as "Languishing": a feeling of stagnation and emptiness, in which passing of the days is perceived without expectations, becoming a "passive" participant in the story. For some, this is the main thrill of 2021; for others, the pandemic's 'psychological longevity'. https://www.nytimes.com/2021/04/19/well/mind/covid-mental-health-languishing.html  

The best way to approach business nowadays is to see competitive strategy from the local perspective and give those who are 'in the field' the opportunity to maneuver according to the reality of the business versus the pandemic and its cycles.

And from the reality of each person, it is not time to plan, but to endure, with great efficiency and awareness when spending.

Original Article https://www.forbes.com.mx/economia-de-contencion/