The COVID-19 pandemic has affected every aspect of our work and life.
Business executives have had to quickly reconfigure operations, and millions have had to unexpectedly work from home or cease work entirely. Videoconferencing has become the killer app, and Zoombombing became a new privacy concern.
Despite the widespread health and business challenges brought on by the coronavirus, two-thirds of U.S. business leaders are optimistic the domestic economy will recover within a year, according to a survey TMF Group recently released.
It’s an encouraging sign that business executives in the U.S. are expressing this type of optimism, particularly based on the unprecedented challenges experienced throughout the economy over the last few months. This group was obviously very confident before the onset of the pandemic, and they now seem eager to not only restart their businesses but help reignite the economy as well.
We conducted the survey in the middle of April to gain insight into how companies plan to navigate these uncertain times. More than 40 percent of the 300 decision-makers who took part in the poll work in companies with more than 5,000 employees. Most of the respondents (85%) said their companies do business outside the United States.
Nearly a quarter of respondents (23%) expect a V-shaped economic recovery, meaning a dramatic bounce to pre-virus activity by the end of 2020 following the sharp collapse. Only a small minority (12%) anticipate the economic impact of the pandemic to the last two years or more.
Looking beyond the U.S., business executives were a little less optimistic but still positive: 56% of respondents said the global economy would recover within a year.
It may be easy for critics to judge the survey takers as stereotypical American optimists, but I believe their confidence is grounded on some key facts. The economic shock has been largely demand-driven, as travel restrictions and government stay-at-home orders shut down wide swaths of the U.S. and global economies. Many of the world’s governments acted quickly to offset the economic damage. In the U.S., the federal government and central bank organized a massive stimulus package and pumped trillions of dollars into financial markets. More than 60% of respondents said the financial support to workers and businesses in the U.S. has had a very positive or somewhat positive effect on their companies.
Now, as states allow more businesses to reopen, consumers are eagerly venturing out despite the ongoing health risks. As consumer and business demand rebound, companies will begin hiring again.
Indeed, business decision-makers are confident their businesses will rebound quickly. More than half say their companies will return to normal operations within six months.
In times of crisis, there’s a premium on bold leadership and decisive action. Resilient leaders continue to mount appropriate responses to the global pandemic while charting paths to recovery.
The survey underscored that the pandemic has forced business to rapidly evolve. Many are moving ahead to reassess, reimagine or reinvent their businesses. Thirty-six percent say they plan to accelerate plans for international expansion, and 32% plan to seize domestic growth opportunities.
It’s a positive sign that the strategic imperative to go global remains strong because COVID-19 has dealt a serious blow to the international system. The World Trade Organization predicted in April that world merchandise trade would plummet between 13% and 32% this year.
But the factors that have driven globalization for several centuries have not disappeared. People have been driven to seek profit internationally since the earliest days of the Silk Road, and this instinct will continue. Furthermore, the spirit of international cooperation has been strong in the response to the pandemic. Companies, government agencies and nongovernmental organizations are working across borders to solve problems at scale, such as developing a vaccine for the coronavirus.
A big motive for international expansion is the diversification of supply chains, cited by 35% of respondents. The coronavirus has interrupted the flow of goods across borders, from raw materials to finished products. The disruption has vividly illustrated that today’s highly interlinked, international supply chains have more potential points of failure and less margin for error for absorbing delays and disruptions.
Reducing dependence on one country or region is a priority. Diversifying your supplier base may increase costs in the short-term but will make your network more flexible and agile and potentially reduce the economic shock of future disruptions.
The outbreak of COVID-19 forced business to reassess every strategic objective and business plan. The health crisis has exposed vulnerabilities and created unforeseen challenges.
As businesses around the world consider how they can return from the economic crisis unleashed by COVID-19, the survey results provide some food for thought. Expanding internationally or domestically in uncertain times, for instance, may seem counterintuitive but could also fuel faster growth. Severe adversity provides real perspective. It is possible to find strength and confidence in the face of real hardship.
TMG Group is an international professional services firm that provides administrative support services across multiple jurisdictions.