12 macro-economic trends creating post-covid's new normal

17 June 2020 Consultancy.uk 5 min. read

The current health pandemic is creating a number of discontinuous macro environment shifts. These macro shifts are redefining global markets and societies, setting the future context for organisations, institutions and individuals – a ‘new normal’ operating environment post Covid-19.

According to experts at Monitor Deloitte, the disruptions to the macro environment can be grouped into three domains.

Political and regulatory 

More market intervention
Government responses to the pandemic will shape key aspects of how businesses recover and behave in the longer term. Wider government interventions, regulation, and directives will further influence how individuals and society act and engage in the economy. Governments globally have already deployed fiscal stimulus packages and a variety of lifelines to corporations and citizens.

Silent rise of nationalism
Countries, companies and individuals have been quickly forced into isolation, with walls (physical or otherwise) swiftly put up – from travel restrictions, to border closures, to breaks in global supply chains – with an inward focus of protecting citizens and local economies. The rise of a nationalist force is apparent and had been silently brewing on a global scale before the crisis. 

Rise of the East
The rise of Asian economies and countries is not a new trend, but one which has been swift and will continue for the foreseeable future. This continued rise, coupled with how the pandemic is being navigated within the Asia-Pacific region is an important trend that will shape economies and businesses on a global scale. How and when countries emerge from the lockdown, manage subsequent outbreaks and adjust government policies will define the economic and business landscape for generations to come. 

Agile governance
The demands of governments are diversifying, deepening, and quickening. Traditional policy development lags innovation, and the incongruence between corporate and citizen expectations and the agility in public institutions is rising. The need for greater agility in government policy and regulation is particularly true during emergency situations triggered by events like the Covid-19 pandemic. Traditional governance structures and policy-making models need to evolve from cumbersome and slow, to agile and responsive. 

Economic and environmental 

Liquidity and solvency
The ‘great lockdown’ of economies and society has led to a hibernation of many businesses, triggered significantly reduced consumer demand and has led to a strain on liquidity across the economy. Businesses are being propped-up by government intervention, but insolvency, restructuring and fundamental structural shifts across industries are inevitable – creating challenges for many and opportunities for the few that are well positioned. 

Risk and resilience
11 years of a bull-market and the associated focus on growth has come to a dramatic halt. It can be expected that markets and investors will be looking for balanced risk and resilience over the medium term, which will inevitably shift corporate strategies and behaviours. Capital is likely to shift from risky assets, segments and geographies to more resilient domains that can provide stability and continuity. 

Increased inequality
The Covid-19 crisis is producing many positive examples of global collaboration, but it is also exposing some alarming tendencies between and within developed and emerging economies. Although the virus is unbiased in who it affects, it is particularly detrimental to some of the most vulnerable members of our society. If left unaddressed, the social crisis created by the pandemic may also increase inequality, exclusion, discrimination and global unemployment in the medium and long term. 

Sustainability and climate change
Sustainable business practices have become increasingly common place across most industries and in many developed economies. The sudden ‘powering down’ of businesses resulting from the crisis has highlighted what is possible in terms of reduced greenhouse gas emissions and dramatic declines in city pollution levels. This pre-Covid trend and the rise in climate change sentiment could see shifts in the redirection of capital and government infrastructure investments towards sustainable outcomes. 

Societal and technological

Virtualised connections
An entire workforce, working virtually and productively, was not a generally accepted trend before the crisis. The instant virtualisation of work and workers has been facilitated by significant investment in digital infrastructure by governments and businesses over the last decade. This disruption is likely to remain in some form post-Covid and will create new opportunities across industries for enhanced collaboration and new digital solutions.

Analogue renaissance
Despite the critical role of digital solutions, connectivity and mass virtualised work, society may experience the desire for an extended ‘digital detox’. As lockdowns are lifted, societies open back up, and sport, recreation and entertainment become available again, we are likely to experience a resurgence and evolution of in-person and analogue business models.

Trust as a value
Faith in institutions, government and communities is essential during a crisis. This was evidenced previously, and has only accelerated through the pandemic. Trust in, and between institutions is critical at both an economic and societal level. Businesses will require trust of their workers, stakeholders and consumers at higher levels than before the crisis, requiring a new approach to conduct and expectation management. 

Privacy and security
Surveillance technologies and techniques will be an important aspect to suppressing the virus. This blurring of privacy boundaries, data protection and citizen rights will test societal norms and may reset the rules for future data security and capture regulations globally. 

For more information on the topic, download Monitor Deloitte’s ‘Reinvent to thrive’ study.