4 minute read
What’s Over the Horizon by Tom Standage
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Will 2021 prove to be a lucky number?
Tom Standage ► Tom is deputy editor of The Economist, editor of The World in 2021, and host of its future-gazing podcast, The World Ahead.
Illustration ► Aurore de La Morinerie
TOM STANDAGE
What’s over the horizon?
Do you feel lucky? The number 21 is connected with luck, risk, taking chances and rolling the dice. It’s the number of spots on a dice, and the number of shillings in a guinea, the currency of wagers and horse racing. It’s also the name of a family of card games, including blackjack, that are popular with gamblers. All of which seems strangely appropriate for a year of unusual uncertainty. The great prize on offer, of course, is the chance of bringing the coronavirus pandemic under control. The race is on between injection and infection, as vaccines are rolled out on one hand and the virus mutates on the other. Increasingly, though, the prospect of a return to some kind of normality seems within reach. But it will be a new normal, rather than a return to the pre-pandemic world – and getting there will be a bumpy ride. So here are some things to watch for in the coming months.
First, the economy. The world’s wealthiest consumers are sitting on piles of cash. Will they spend it? Excess savings in America – the amount by which consumer saving exceeded normal levels of saving – exceeded 6 per cent of GDP in the first nine months of 2020 alone. It’s a similar story in Britain, Canada and Australia. The result could be a spending spree and a strong global recovery. Too strong, perhaps: there is an active debate about whether this could cause a dangerous rise in inflation. Another source of uncertainty is how, when consumers open their wallets again, their spending habits will have shifted. Will they want to spend less on goods and more on experiences they have been denied during the pandemic, such as luxury holidays or fancy meals? Much depends on the answers, not just for the luxury industry but for the economy as a whole.
And that’s the second thing to watch for: the extent to which pandemic-era habits will endure. Whether it’s working from home, online shopping, food delivery, remote learning or mobile payments, adoption of a wide range of technologies has been accelerated by several years in the past few months. Clearly people are not going to keep doing everything virtually, but nor are they going to give up these new behaviours entirely.
Instead they will end up somewhere in the middle – and exactly where will vary by industry, country and activity. New business models and retail trends, such as remote personal shopping appointments, and subscriptions to everything from chocolate to running shoes to cars, have also proliferated lately. All of which means that, as the new normal comes into focus, companies in every industry will need to combine analytics to monitor customer behaviour with the agility to respond quickly to new patterns of demand.
Third, politics. The chaos and unpredictability of the Trump presidency may have ended, but companies increasingly find themselves caught up in geopolitical struggles, and in particular that between the US and China. Whether it’s telecoms gear from Huawei, cotton from Xinjiang, or access to lithium, cobalt and rare-earth elements – high-tech commodities where China controls the supply – managers face tough choices as a result of China’s clout as a supplier, a manufacturing hub, a vital market and an increasingly assertive superpower. Tech giants suddenly care about the South China Sea, now that semiconductors have emerged as the new oil, and Taiwan, the world’s leading supplier, as the new Middle East. At the same time, companies face demands from employees and customers to take stands on climate change and racial justice, areas where politicians have done too little. More than ever, CEOs need to be politicians.
Finally, some potential bright spots to watch out for. One silver lining of the crisis is that governments in Europe and America are investing in green recovery plans to create jobs and cut emissions. If the UN climate conference goes well in November, 2021 could come to be seen as the year when the world got serious about tackling climate change. The gradual return of travel offers a chance to reinvent tourism in more sustainable forms. The rise of remote working presents opportunities to improve diversity, by broadening access to global talent. The enforced experiment in remote schooling may end up destigmatising online learning, making high-quality education more widely available. And in all these areas, as well as in medical science, the pandemic has accelerated innovation. Navigating the uncertainties of the coming months will require strong nerves and a willingness to take risks. But complacency that things will simply go ‘back to normal’ is one luxury that nobody can afford.
