What you need to know about economic growth, revival and transformation

The shock inflicted by the pandemic on the global economy has been more severe and has occurred much faster than any other in recorded economic history.

“The economic fallout from COVID-19 dominates companies’ risks perceptions,” according to the World Economic Forum’s survey of nearly 350 senior risk professionals taken at the height of the pandemic.

“Prolonged recession of the global economy” topped the list of respondents’ concerns, with two-thirds saying it was the most worrisome for their company. It was closely followed by other economic risks, including a surge in bankruptcies (big firms and SMEs) and wave of industry consolidation, high levels of structural unemployment and failure of industries or sectors to properly recover.

These fears aren’t unwarranted. Unemployment has soared even in some of the most advanced economies – and many jobs may never come back. The pandemic “has impacted over 75% of the world’s global manufacturing outputs,” found another recent Forum report. And by some estimates, “most economies will not return to their previous performance peaks until late 2022,” said Stanford University’s Michael J. Boskin.

However, the pandemic provides a chance to “build entirely new foundations for our economic and social systems,” said Forum Founder and Executive Chairman Klaus Schwab.

“The COVID-19 crisis is affecting every facet of people’s lives in every corner of the world. But tragedy need not be its only legacy,” he continued. “On the contrary, the pandemic represents a rare but narrow window of opportunity to reflect, reimagine and reset our world to create a healthier, more equitable and more prosperous future.”

“The only acceptable response to such a crisis is to pursue a ‘Great Reset’ of our economies, politics and societies,” Schwab recently wrote.

“Specifically, we will need to reconsider our collective commitment to ‘capitalism’ as we have known it. Obviously, we should not do away with the basic engines of growth. We owe most of the social progress of the past to entrepreneurship and to the capacity to create wealth by taking risks and pursuing innovative new business models. We need markets to allocate resources and the production of goods and services efficiently, particularly when it comes to confronting problems like climate change,” he continued.

“But we must rethink what we mean by ‘capital’ in its many iterations, whether financial, environmental, social, or human.”

This new era calls for focusing on economic growth, yes – but, at the same time, the direction and speed of growth and its impact on people and the planet.

On the people side, as Thales Panza de Paula, the Forum's Partner Engagement Lead for the Financial Services Industry, wrote, "Instead of focusing on saving jobs by subsidizing and bailing out inefficient organizations, governments should spend on social protection systems that support individuals and alleviate the economic and social consequences of recessions."

And on the planet side, six "nature-positive" transitions combined could lead to a grand total of $3.6 trillion in annual business opportunities and 191 million jobs by 2030, says the Forum's New Nature Economy Report II on “The Future of Nature and Business. This includes transitions like sustainable management of forests ($230 billion and 16 million jobs) and creating transparent and sustainable supply chains ($515 billion and 18 million jobs).