Economic growth: New pockets

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Dave Deruytter takes a look at where the positives may be found in the new normal on the subject of economic growth.

After a 6.8% drop in GDP in Q1 2020, the Chinese GDP rebounded with 3.2% in Q2 of this year. Concerning economic growth, the reading for the first half of 2020 as a whole was still negative at minus 1.6 %. Still, it is a quite impressive rebound given the worldwide scale of the COVID-19 crisis and its disruption of the global value chains. Retail sales in China were and still are weak though, particularly all activity that has to do with travel and leisure, which is much lower than before the crisis. Hope for a V-shaped recovery in GDP in China is still there. Nevertheless, a vaccine or other medicine will be needed for real confidence to return and for private travel and leisure activities to fully recover.

Against this rather negative background, it is good to start to look for spots where the new worldwide economic growth may come from in the future. Vaccine research and development, and almost all services related to healthcare and hygiene, obviously immediately come to mind as future proof economic sectors.

All IT software and some hardware, plus the services related to the extra impetus that the digital revolution is getting, are not surprisingly a close second. Indeed, imagine near-realistic digital meetings with colleagues or clients around the globe where we all wear VR glasses. Yet, for that to happen the bandwidth of the internet may have to increase substantially.

Because of the extra acceleration in the digital revolution, the green or sustainable evolution in life and in business may also grow into a true revolution. Every single day the sun is bombarding the earth with many, many times more energy than the whole world consumes. Capturing sunlight, transforming it into electricity and storing it, is getting ever more efficient.

Transporting electricity is lagging the curve though. Maybe hydrogen can be a good means to transport it. Although it is a quite explosive product, hydrogen can be produced from water through electrolysis with oxygen as the rest product. Because more than 70% of the earth’s surface is under water, there is plenty of that around.

Where there is a need, there is a way. History has shown us that. It is a question of focus, of effort and means to make this happen. On the other hand, moving production and life closer to the places where solar power is omnipresent, deserts for example, should limit the need for transportation of electricity substantially, particularly if water is nearby, like in California, Southern Europe, but also in many parts of Africa.

In fact, all businesses, great or small, that embrace health and digital should thrive in the future new normal. Scientists are warning us that COVID-19 may not be the last pandemic hitting us, hinting at a need for continuous attention to healthcare and hygiene. If the leisure and travel business embraces that, it should also find a path to sustainable recovery.

Digital was already powering ahead before the crisis kicked in, with 5G, big data, AI and IoT (Internet of Things) all over the press. And this wave is getting amplified by the effects of the current pandemic, like the spectacular rise of home working. Still, we are humans. It needs to be seen how our craving for togetherness, in one form or another, can continue to be satisfied.