COVID-19: Accelerating While Standing Still

The first wave of the COVID-19 pandemic will likely be remembered primarily as “The Great Lockdown” —when daily life and entire economies came to a screeching halt. No more business travel, shopping trips, or playdates. At one point in early April, approximately half of the world’s population was under stay-at-home orders. With normal life at a standstill, gardening, baking, other domestic hobbies leaped in popularity.

The Great Acceleration

This sense of standing still is only one side of the COVID-19 story though. The flip side is a dramatic acceleration of a variety of macro trends.

Work culture is a prime example. Telework had been growing in popularity in recent years and now about half of Americans are working from home due to COVID-19. Similarly, some analysts were already predicting the demise of the traditional business suit as an increasing number of employers—even conservative institutions such as law firms and investment banks—were embracing business casual dress codes. Now athleisure reigns.

And while many companies were already encouraging the use of videoconferencing—in part to limit carbon emissions associated with travel to in-person meetings—this practice is now on steroids. Videoconferences have become ubiquitous not only for business meetings, but also formal schooling, religious services and happy hours.

Geopolitical Rebalancing Accelerates

Importantly, this “Great Acceleration” also holds true for geopolitics. Prior to the COVID-19 pandemic, globalization was giving way to regionalization of the global economy, technological competition was intensifying, demographic shifts were elevating political risks in many countries, and the international community was struggling to address global climate change. Now, as my colleagues and I argue in a recent publication, the COVID-19 crisis is accelerating the trajectory of all of these trends.

A new regionalism gains momentum: COVID-19 has led countries around the world to close their borders. And it is likely that the pandemic will aggravate nationalist and populist sentiments in many countries, changing the degree and nature of globalization going forward.

Global technological competition accelerates: Technology will be a key part of any solution to COVID-19, while the rapid escalation of social and business activity online has heightened vulnerabilities to disinformation and cyberattacks. All of this will sharpen the geopolitical nature of technology competition.

Aging catalyzes global rebalancing: Older societies face a higher human and economic toll from the disease and, perhaps, a slower economic recovery. And countries with large youth populations that suffer economic dislocations as a result of the pandemic may be at greater risk for social upheaval.

The race against the climate change clock continues: Even as it has helped sharply reduce emissions, COVID-19 has wiped climate policy off the table as an immediate concern. It could return in dramatic fashion, though, if policymakers use post-crisis stimulus programs to prioritize more “green” energy and investment.

Companies Need to Prepare for Global Rebalancing

Even as companies adjust to a COVID-19 world and begin to resume more normal operations, they need to focus on how the geostrategic implications of COVID-19 affect a wide array of business activities, including supply chains, human resources, revenue, and reputation and compliance. Mapping these impacts is particularly important in the fast-changing political and policy environments that the COVID-19 pandemic presents.

This post was adapted from an article originally published on ey.com here.