By Bob Joyce, Senior Director, Business Retention and Expansion
What comes after COVID?
Global consulting firm McKinsey & Company recently produced a white paper on next steps to sustainable growth. Their panel of 6 experts looked at the question of how we safeguard lives and livelihoods and, at the same time, grow the economy.
Three broad “givens” shaped their answers:
First, 3 to 4 percent global growth is possible with available technology – we don’t need a “productivity miracle”.
Second, we don’t have to choose between long term and inclusive growth. Past periods of sustained growth have proven the “rising tide lifts all boats” theory.
Third, medical advances achieved during the pandemic provide the possibility for public-health innovation and delivery.
Here’s the big “If” … “If” global leaders set the expectations that these outcomes are possible, and act on them, then the world could be on the cusp of a new age of prosperity.
And… here’s what it would look like:
- a recovery that adds 30 to 50 percent to GDP over the next decade
- a better quality of life for more people
- a more sustainable future for the planet
If not, then the recovery could be slow, less equitably distributed, less sustainable, and with worse outcomes for global health and the environment.
While economic outcomes from the pandemic varied from country to country, most are well-positioned.
Here’s what history tells us:
In the United States, expansions in the 1960s, 1980s, and 1990s delivered increases in total GDP of 30 to 50 percent. McKinsey calls them “forty percent recoveries.”
Other US recoveries, like those in the 1970s, 2000s, and 2010s, delivered only half that growth…very similar to the same slow pace of recovery the globe.
The conclusion: “forty percent recoveries” do not happen by accident. They are the result of choices made by leaders in government and business and by individuals, families, and households.
According to the experts, here’s what that would look like:
- Increase vaccination rates to drive uncertainty lower and unleash accumulated savings and pent-up demand.
- Accelerate digitization and transitions toward sustainability to trigger new demand, new jobs, and higher productivity growth.
- Significant reskilling and smart assistance to vulnerable populations to support a broad-based recovery in workforce participation. The economy becomes more inclusive.
- Better public health and lower mortality rates become the norm (better hygiene, more concern for the health of others, faster and more decisive reactions to public-health threats).
- Medical innovation accelerates…for example: cures to major diseases like some cancers and malaria.
McKinsey acknowledges that our debt burden and inflation bear watching…but both potential problems are manageable based on all historic measures.
McKinsey’s analysis shows that in a new age of prosperity, global growth reaches 3.6 percent annually by 2030. Momentum builds as businesses invest and create jobs in response to rising demand and the need to catch up on postponed upgrades to equipment, structures, and training. About 30 percent of net new growth comes from investment and another 20 percent from more people working with better skills. This kind of recovery is sustained by the higher living standards of households and profits of businesses that stronger productivity delivers, which accounts for the remaining 50 percent of growth.
Sounds good, right? Let’s all do our part to encourage leaders to make decisions like the ones mentioned in this study…for the long term.