The Banking Executive Magazine - March 2021

Global Economic Outlook 2021 IT and Communications: As ex- pected, the IT and communications sector had one of its best years in 2020 in terms of global adoption. From the consumer side, online shopping has increased by 15%. Amazon, an the largest IT-based company roughly doubled its entire workforce by adding 400,000 extra jobs. As for corporate adoption, a study by McKinsey and Company claims that “funding for digital initia- tives has increased more than any- thing else—more than increases in costs, the number of people in tech- nology roles, and the number of cus- tomers”. In fact, that same study also concluded that the pandemic has led to the percentage of North American digital consumers to rise by 58%. Oil and Transportation: Air-travel’s decrease of 60% owing to the pan- demic has left the airline industry with losses amounting to $370bil- lion. With aviation being the pri- mary consumer of 7.8% of all total oil consumption worldwide, it is then no surprise to see that the com- modity price of oil has fallen by - 32.7% in the year of 2020, with a portion of that fall reflecting the de- crease in oil demand by manufactur- ing plants as well. GLOBAL TRENDS 2020 As the pandemic primarily emerged, imposing increasing and surging human costs worldwide, the global economy was projected to decline by 3% in 2020. This is much worse than what had occurred during the 2008-2009 financial crisis. These numbers were preliminary and were based on the assumption that pan- demic was supposed to fade in the second half of 2020 and lockdown measures would eventually un- wound. Additionally, the global economy was projected to grow by 5.8% in 2021 as the economic activ- ity returns to its normal pace. How- ever, the reality is that the pandemic had a more negative impact in the first half of 2020 than anticipated and the recovery is predicted to be slower than previously estimated. Secondary estimations have pre- dicted a further decline of growth projected at -4.9%, and a global growth of 5.4% in 2021. The stricter the lockdown measures, and the wider spread of the pandemic, the greater the uncertainty around this forecast. The baseline of the projec- tion rests on key assumptions about the fallout from the pandemic. Specifically, among emerging mar- kets, the first quarter GDP was worse than expected, with a catastrophic hit to the global labor market, a con- traction in a global trade and weaker inflation. Nevertheless, while the im- pact is different across the different sectors and different regions. the BANKING EXECUTIVE 24 ISSUE 147 MARCH 2021 Numbers from: Orbis Crossborder Investment, Bureau van Dijk THE IMPACT OF COVID-19 ON MANUFACTURING FDI PROJECTS GLOBALLY