World faces delayed economic recovery from virus: Officials

The world faces a long and difficult road towards a full economic recovery despite the benefits of advanced technology, the potential imminent development of a vaccine for COVID-19, and government stimulus packages that have so far pumped over $10 trillion into the global economy.

This view is according to a panel of leaders representing some of the world’s largest organisations at the Virtual Edition of the Global Manufacturing and Industrialisation Summit (GMIS2020), which was held on Sept.4-5 in Hannover, Germany.

The heads of Mubadala Investment Company, Siemens, Honeywell and Schneider Electric joined a keynote panel on day 2 of the GMIS2020 Virtual Summit to discuss and debate ‘A trillion-dollar question: in an age of digital restoration, how are leaders repurposing our economies to deal with a post-crisis era’. The session was followed by a keynote speech by Patrice Caine, Chairman and CEO, Thales Group.

The panelists were all united in their praise of swift government financial actions taken to protect jobs and businesses amid the widespread lockdowns imposed around the world to slow the spread of the coronavirus pandemic.

However, they warned that this would likely lead to a period of economic stagnation in 2021, and possibly even through 2022, especially given the potential threat of a second or even further waves of the coronavirus.

Khaldoon Khalifa Al Mubarak, Managing Director and Group Chief Executive Officer, Mubadala Investment Company, said: “We have seen the positive economic reaction to the financial steps taken by most governments, particularly in the large economies around the world. Getting back to a more stable period of economic activity, and visibility into business growth, will take time.”

Joe Kaeser, President and CEO of Siemens, agreed that it was vital for government rescue packages to be channeled into the right areas. He said: “It’s crucially important that we not only have trillions of dollars of government money and stimulus, but also that this money is invested into future-oriented and not backward-oriented industries, because they are going to die anyway. And if we are not mindful about this today, we risk forfeiting much of the future.”

Darius Adamczyk, Chairman and CEO of Honeywell, agreed that governments had acted quickly and decisively and said that attention must now turn to financing the vast economic stimulus that has been required to support the world?s economies during the pandemic. He said: “There has been an incredible level of stimulus in the United States, the EU and other economies as well. Now governments around the world are going to have to figure out a smart way to pay for this that doesn’t damage the economies going forward.”

Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric, warned there was a danger there would be a lost generation of youth who would struggle to find opportunities in a depressed economy in the coming years. “Protective measures have understandably focused on vulnerable older people in our societies, but the people who are getting punished because they can not get jobs are the youngsters, and they are the future of our world,” he said. “We work closely with governments and other institutions to propose internships, and try to make sure that there is not a generation that is left behind.”

Tricoire added that government stimulus should also be directed towards small and medium enterprises (SMEs) which provide the lifeblood of the economy. “Large companies like us live within an ecosystem of many suppliers and smaller companies and it’s very important that we help those companies through the crisis and actually use it to help them modernise and digitise, to be more sustainable and prepare for the future.”

Al Mubarak sounded a note of optimism that a recovery could be enabled by the arrival on the market of potentially multiple vaccines for COVID-19 as well as progress that is being made with numerous therapies. “There is going to be a vaccine sooner rather than later” he said

The panelists all agreed that the crisis would act as a catalyst for accelerating digital transformation in most sectors of the economy as well as a greater shift towards sustainability. As global leaders in technology and innovation, their companies have all made significant strides down this path.

Mubadala has been shifting its portfolio focus in recent years, investing more in technology and moving away from some of the traditional sectors the company had previously invested in. Since COVID-19 emerged the company has begun to accelerate that transition.

Al Mubarak said: “The way that we’ve been shifting our portfolio to these areas, be it energy, renewable energy, energy storage, mobility, automation, robotics, artificial intelligence, these are all areas that we at Mubadala took a view on pre-COVID. The crisis now just confirms we were on the right path, and we will continue to invest aggressively in that space.”

Al  Mubarak added that one of the areas that Mubadala is now monitoring closely is hydrogen, which holds huge potential to help combat climate change through the decarbonisation of energy systems, industry, and mobility.

WAM