And the winners remain China and India
The BECH Index 2020 – Corona version Based on data from the International Monetary Fund. Includes estimates for 2020 and 2021
The BECH Index 2020 – Corona version
Based on data from the International Monetary Fund.
Includes estimates for 2020 and 2021
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The BECH Index 2020 – Corona version
How deep will the recession be?
I am an economist, but predicting the impact
of Covid-19 on the economy is not a simple
mathematical exercise. We are way beyond the
borders of what any macro-economic model can
simulate. As the global economy was well balanced
before Covid-19 took us down, IMF predicts that
we will take a draconian dive, but that it will only be
temporary.
The dive comes from hitting supply and demand
hard at the same time. Nevertheless, the depth
of the recession will vary substantially across
industries. While government and much of the
logistics and FMCG-industries are unaffected and
e-commerce is booming, other parts of retail, the
travel and experience industry (entertainment,
tourism and hospitality) have come to a complete
halt. Across the board we might experience a thirty
per cent contraction of the economy from March to
August. On a full-year basis, some predictions say
that the contraction may reach ten per cent.
However, these are not numbers any of us can use for anything. The situation of each individual
company varies greatly and maybe your customer base is deviating from the average?
Some companies have to lay-off people and stop all expenses and investments. Some will only
survive if they are bailed out by their government. Some will not survive.
But other companies are busier due to the Corona-situation. They are well consolidated and liquid or
fit the rescue packages offered by the governments. They can afford to pay their bills, keep their key
employees and use the time to do some housekeeping (such as considering better business models
and processes). You will have to check on your customers and the prospects in the pipeline to find
out how much it will affect you. Despite the grave situation, there will still be work to do in many
companies.
How long will the recession last?
Apart from industry variations, most restrictions will have been lifted by late autumn.
The Corona-recession is not caused by systemic unbalances in the global economy, which is why
I am fairly optimistic that we will recover fast. The swift recovery comes from the gigantic rescue
packages currently offered by our governments and from consumers and companies going out of
their way to help each other.
What your world looks like right now and until the situation normalises depends entirely on your
solidity and your customers. Before Covid-19, there was a shortage of skilled IT resources and that
will also be the case afterwards. Hold on to your people and urge your customers to do the same. Be
flexible with payments if you can. Keep the projects running.
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