2020 has been a year for the books. The global pandemic has hurled the world into the worst financial crisis since the Great Depression, upending ways of life for all facets of society. Embattled governments, a rise in food insecurity, and a push for national self-sufficiency are among the trends that will shape the global outlook and operating environment through 2025.
A new report by Kearney’s Global Business Policy Council, The great shakeout, addresses these issues, arguing that businesses and governments must work together to not only get through the crisis but also build resilience for the future.
COVID-19 and its impact on health, economics, and society is at the center of all the trends identified in the report. Indeed, the pandemic is leading to more bankruptcies, mergers and acquisitions—upending government budgets and stranding vulnerable groups such as minorities, students and working mothers, among others. The report notes that the U.S. federal deficit has reached 17.9% in the 2020 fiscal year—almost twice as large as the highest deficit seen during the Great Recession in 2009 (9.8%).
The authors also point out that food insecurity will proliferate as the virus disrupts food supply chains. Emerging markets will be hit particularly hard as remittances fall and humanitarian aid grows scarcer.
The report also highlights how the great shakeout across industries and countries will compel companies to rethink their operations, marketing, and employee needs—from localizing supply chains to providing more childcare options to working mothers.
“A crisis of health is converging with economic hardship and social unrest to change the world as we know it,” says Paul A. Laudicina, founder of Kearney’s Global Business Policy Council and co-author of the report. “Governments are facing mounting pressure as they are forced to provide more economic support with fewer resources. These challenges will only grow unless the public and private sectors work together to support vulnerable groups such as small businesses, minorities, and laborers whose jobs are threatened by automation.”
Despite the challenges facing the world over the next five years, the report points out several reasons for optimism.
“Both public- and private-sector leadership will be held to new standards coming out of this crisis,” argues Erik Peterson, managing director of the Global Business Policy Council and co-author of the report. “Governments will continue to face a loss in public trust if they do not step up. Similarly, business leaders will have to ensure that they answer important calls for more diverse products, brands, and boards.”