As a new year begins, we look to the future. What does 2021 hold in store?
The macro situation
Just three years ago, new year 2018 marked the moment when the global economy seemed to finally be ready to normalize 10 years after the economic unraveling following the global credit crisis.
As 2021 begins, we are once again at the tail end of a global crisis, this one more than simply an economic upheaval.
In September of 2020, the Asian Development Bank’s forecasted a 7.3-percent economic contraction in 2020 and a 2021 GDP growth of 6.5 percent. By its December update, ADB had revised the 2020 Philippine forecast to a contraction of 8.5 percent (vs. a 4.4-percent contraction of the SE Asia region), with its 2021 forecast remaining unchanged at a 6.5-percent growth. The 2021 forecast is slightly higher than ADB’s forecasted 5.2-percent growth for the SE Asia region. ADB’s outlook considers advances in vaccine development and availability but is tempered by caution stemming from the continuing challenges of COVID-19 and the global tourism collapse.
The ADB forecast is not too different from the World Bank forecast, which predicted an 8.1-percent contraction in 2020 and a 5.9-percent growth in 2021 for the Philippine economy. ING similarly forecasts that 2021 Philippine growth will be below the 6-percent pre-pandemic growth, citing soft consumption recovery (affected by a decrease in remittance), decreased capital investment especially in the construction sector, and relatively conservative fiscal interventions. The sub-6 percent 2021 local forecast compares with the IMF 2021 global forecast of 5.4-percent growth. However, Morgan Stanley which predicts 2021 global growth of 6.4 percent, significantly higher than what it references as the 2021 consensus forecast of 5.4-percent (which is in line with the IMF forecast). The key difference is that while most institutions forecast divergent paths to recovery for different regions, Morgan Stanley forecasts synchronous global recovery citing continued consumption which is expected to push inflation back up, the recovery of exports of key trade-dependent economies, and rebounding investments reflective of healthy corporate sector risk tolerance.
What is clear is that while government intervention can help float economies, long-term recovery will be dependent on a rebound in consumption, which is in turn effected by employment (or the lack of it), a normalizing of trade channels, and a return of corporate sector confidence and hence, capital investments.
At the heart of all of this, of course, is the ability of business to operate and deliver in the pandemic and post-pandemic situation. Of course, the ability of governments to rapidly deploy the COVID-19 vaccines as they become available will be important and so will government intervention to allow supply chains to fully normalize. Part of this is ensuring that the financial sector provides support to businesses affected by the pandemic but at the heart of all of this is the ability of businesses and individuals to adjust to the changing situation.
Business and the future
What is interesting about reading these forecasts is that many of them are backward-looking. They look at what has gone and what is and anchor their predictions on the past. But forecasts are necessarily about the future. And this explains why so many of these forecasts are hedged with ifs and buts.
For managers worldwide, the future will be determined by their ability to read and ride the waves of the future. What trends face business in 2021?
Some trends are rooted in the pandemic. They are about location, communication and transportation.
What the pandemic taught us is that much of our work can be done from the safety of our own homes and that most meetings and communication can be conducted remotely. This does not mean that the office will disappear. There are still some things that are best done face-to-face but the corporation of the future will be much more distributed than it used to be. For human resources management, this has meant a need to develop more sophisticated methods for managing performance, veering away from line-of-sight supervision towards indicator driven performance management.
The challenge to supply chains has made businesses respond in two ways, often both. To avoid being at the mercy of faraway suppliers, businesses are looking closer to home, or at least closer to their customers for critical inputs. Secondly, businesses are looking at having multiple suppliers to make sure that they have alternative sources when one source shuts down. Interestingly, many businesses have found that it makes business sense to have closer relationships with suppliers, and especially to work with the smaller local suppliers that are more likely to provide support in times of crisis.
Not surprisingly, many of the trends that are expected to dominate Business 2021 are rooted in technology: e-commerce, automation, assisted reality, augmented intelligence, electronic payments, tech-enabled social engagement. These are all long-term trends that gathered speed in the time of pandemic. Businesses that master the art of marketing and delivery in an online environment will thrive. And as the vaccine slowly brings people out of their homes, the businesses that can seamlessly deliver in an omni channel environment will be at an advantage.
The pandemic did not stem the tide of innovation and technology. If anything, it accelerated the tide. Futurist Jack Ulrich’s 2021 predictions paint a radically amazing vision of what is in store. From self-driving cars (old stuff) to teenagers in the board room (already a reality in some European companies), to bio-printing, with Rensselaer Polytechnic Institute having announced FDA approval of their 3D printed living skin with blood vessels, the developments are breathtaking.
But there is also a human side to these trends, partly fueled by the enforced reflection and sustained relationship building with smaller communities brought on by lockdowns as well as international rage concerning bigotry and misuse of power. In 2021, certain very human things will be very important: (a) a return to some simple joys: baking, gardening, meditation, art and all sorts of individual art and creativity; (b) increased interest in fitness and wellness, both mind and body; and (c) an expectation of social conscience from large corporations in all things ranging from environmental matters to diversity and inclusion.
As technology widened our accessible world, the pandemic contracted our immediate concerns and environment. We were forced to re-root ourselves in our families, tribes and communities. Many of these relationships will grow stronger and businesses that can leverage these new roots both in its consumers as well as in its employees should be able to reap benefits.
On the home and individual fronts, we expect homes to slowly adjust to the new rhythms that we discovered in the pandemic. We expect families to want to find dedicated spaces for work and learning at home, as well as space for their new recreations, whether cooking or yoga. We also expect the significant shift to digital content consumption (and creation) to continue to increase.
In many ways, the long waves of technology and innovation and the shock of the pandemic forced both a widening and narrowing of our focus, neither of which are bad things.
For 2021, the challenge is in choosing which waves to ride and how to ride them not just to recovery but to progress. 2020 may have shrunk our visibility of the future but 2021 holds vibrant promise.
Zukunft is the German word for future. It is a concatenation of the root words “zu” meaning “to” and “kunft” which comes from the German word “Kommen” meaning “to come.” Hence it literally means what is still to come.
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