Overcoming the challenges of change

BusinessWorld Virtual Economic Forum examines the new world created by COVID-19

By Bjorn Biel M. Beltran, Special Features Assistant Editor

Change happens both very slowly and very suddenly. Nothing could be truer in the reality of the COVID-19 pandemic, which has sent the world reeling from its massive social, political, economic, and cultural impact.

Almost overnight, the business world has had to adapt to a new paradigm that limits its freedom of movement, its trade, and how it operates. Digital transformation, which has been slowly building momentum in the years prior 2020, suddenly became a core strategy for both private and public organizations.

Proof of this change is the BusinessWorld Economic Forum, BusinessWorld’s flagship and award-winning event, which went virtual for the first time this year, to take on the theme, “Forecast 2021: ReBoot. ReThink. ReShape.” The two-day virtual forum aimed to gather insights from the world’s foremost business experts and leaders to attempt to chart and navigate the future of a world that has been wracked by change.

Headlining the forum were international keynote speakers Børge Brende, president of the World Economic Forum, and Bernardo Mariano, Jr., chief digital and information officer of the World Health Organization (WHO), last Nov. 25; and Ndiamé Diop, country director for Brunei, Malaysia, Philippines and Thailand of the World Bank, and Kelly Bird, country director of the Asian Development Bank (ADB) last Nov. 26.

In his address, Mr. Brende highlighted the importance of international cooperation amidst this time of uncertainty, to foster a better world after the pandemic in The Great Reset.

“We know that we are still in the middle of the worst health crisis that we have seen in a century, and we know that if there is COVID anywhere, it will be everywhere. There really is a global responsibility to fight this pandemic and I think that in many places in the world, we are still in the crisis mode. We are not in the recovery phase yet. We are still fighting the pandemic,” he said.

The Great Reset, a movement led by the World Economic Forum, seeks to take advantage of the unique window of opportunity to shape the future state of global relations, the direction of national economies, the priorities of societies, the nature of business models, and the management of a global commons. Mr. Brende noted Asia’s part in shaping this new world.

“This year marks the entry into the Asian century. This year is the first one where Asia is more than 50% of the world’s GDP, Asia is also 50% of the world’s population. We have seen that the first economies that have started to revive are the Asian ones. We know that China, the world’s second largest economy is expecting to grow this year. We also know that other Asian countries have fared better because they were faster in fighting the pandemic and keeping it under control,” he said.

The Philippines, in fact, is in a great position relative to other nations. Mr. Diop of World Bank, in his own keynote address which tackled the economic growth prospects to keep in mind as the world enters 2021, said that the country had one of the strongest growth momentums in Asia, along with a strong fiscal position, low fiscal deficits, low public debt, low inflation, and a robust banking system.

“That such a strong economy like the Philippines pre-COVID suffers so much is the best illustration of the unique destructive scale of this pandemic,” Mr. Diop said.

Mr. Diop noted that the COVID-19 pandemic is more recessionary than any other large crisis the world has seen over the past 50 years, such that a majority of the world’s economies will sink into recession this year.

“No other previous shock that has buffeted the world economy over the past 100 years has all these features at the same time,” he said.

In addition, the pandemic hit the poor and the aspiring middle class harder. In absence of a strong policy response, inequality is likely to increase.

“Despite the rising middle class the past 10 years, millions in the Philippines have not yet reached the economic security of the middle class and remain vulnerable to falling into poverty. The pandemic therefore boldens the risk of rising inequality today, rising inequality tomorrow if poor families stop investing in the health, education, and nutrition of their children,” he said.

“In short, because this disproportionately affects the non-economically secure in society, the big risk in the pandemic is for the short-term damages to prevail for a long time, pushing the inequality of all.”

The pandemic also aggravated unfavorable situations. Individuals with morbidity and families without savings are hit harder. Firms with high number of debts pre-COVID are in higher likelihood of insolvency, banks with poor asset quality will struggle more, governments with weak fiscal positions, and limited external factors will struggle to recover.

Looking for the light
Understanding the scale of the pandemic is a critical part of understanding the impact it will have on society at large. Mr. Mariano of WHO pointed out in his keynote address that herein lies the opportunity.

“The COVID pandemic is an unprecedented crisis that will shape our world for years and decades to come. It is the first pandemic in the digital age, therefore digital technologies are playing a great role during it, including enabling people to work from home or participate in meetings such as this one virtually,” he said.

“As we speak, digital technologies are helping screen populations track people who have been infected and monitor the flow of supply of critical health resources.”

Such developments can both expand primary healthcare, strengthening the fight against the surge of new diseases like COVID, and ensure that those affected by the current pandemic greatly benefits. It is in keeping these benefits in mind did the WHO recently launched and approved its Global Strategy on Digital Health 2020-2024 at the World Health Assembly.

“What we call today digital health will be known in the future as simply the way we deliver healthcare services. While we recognize that advanced digital transformation can move us into the next stage of healthcare services, let’s not forget that currently, we live in a world where equity, access to health, access to broadband is far from ideal. Almost half of the world don’t have access to broadband, half of the world don’t have access to essential healthcare services,” he said.

“Let’s make sure that as we go through digital transformation, we do not amplify these inequalities, that we ensure that digital solutions are accessible to low and underserved communities, that they are accessible to everyone. Let’s make sure that those inequities and inequalities are reduced and not amplified with the digital transformation of the healthcare sector.”

Proper governance of the digital transformation of the healthcare sector, in addition to larger initiatives led by the government, can kickstart recovery. Mr. Bird of ADB said in his keynote address that understanding the benefits and consequences of such innovations will be central to navigating the post-pandemic world.

For instance, remote work will spell new challenges for the global real estate industry, and will likely create changes in the development of cities of the future.

“What remote work means is that this will have implications for how we work in the office. And this is going to have spillover effects on property use on the commercial business districts. This is going to be one of the challenges for the property markets not just for the Philippines but globally, how best now to use central business districts. We might expect demand for that space to slow down over the next decade or so, and this is a discussion that’s just beginning over in other countries,” he said.

The hope for recovery is on the horizon, but such hopes need planned and coordinated action on the part of the public and private sectors to see fruition.

“The pandemic has devastated global economies but we are seeing strong results to address the fallout. I’m confident that with improved public health policies, continuously agile and sound fiscal and monetary policies, the determination to implement structural reforms, the Philippines may be well placed to bounce back,” Mr. Diop said.

“But again, it will not be over for the Philippines, nor any individual country in the world, until it is over for the rest. It will not be over for the balance sheets of any firm, household, banks, or the governments until it is over for everyone.”