Glance around the world: Business experts comment on COVID-19 impacts

By H.A. Silliman, Sacramento CITD communications consultant

Sacramento CITD previously reported on the impact of COVID-19 on trade and economy, from the standpoint of globalization. Here is another roundup of observations from a number of economic development experts:

U.S.A.

The Business Roundtable1 believes the United States needs to see increased testing before businesses can begin to reopen, according to BRT President & CEO Joshua Bolten. He noted that “all the CEOs in our organization agree that testing is an absolutely crucial gating element to getting us back and running safely.”

Bolten said returning to a more normal economic environment should involve a “phased” plan in which some businesses open before others and that policymakers should be working on those arrangements now.

Meanwhile, companies in the U.S. this month (May) who typically have a 30-to-60 day supply on hand, could see shortages of parts that are manufactured overseas, according to Rosemary Coates, executive director of the Silicon Valley-based Reshoring Institute.

Coates, who said she spent 15 years helping companies move factories overseas, has been leading the Reshoring Institute for five years. U.S. companies are concerned with how to survive, how to reduce costs enough to “come out of the other end with some kind of operation.” Nevertheless, some of her clients are talking about a forward strategy to bring manufacturing back to the U.S.

“Reshoring is an economic decision,” Coates said. “You have to make the economics work.”

She noted that the electronics manufacturing giant Foxconn—a Tawainese company—is moving some production out of China to other places.

“I agree we shouldn’t be overly dependent on another country. We also don’t want to shut off some of those relationships if the market is there.”

The current global supply chains have been disrupted by the pandemic, but that won’t send manufacturing back to like it was in the 1960s. “The reality is we live and work in a global economy.” Companies, however, will now think differently about how to source supplies. She hopes that there will be tax or other incentives to encourage reshoring.

Britain

Dame Karen Pierce, Britain’s new ambassador to the U.S. joined Politico.com’s Ryan Heath in a discussion3 of the Britain’s response to the coronavirus pandemic and other global matters on April 24.

For now, the United Kingdom is keeping its borders open to keep the economy moving, Pierce said—to keep supply chains open and equipment and scientists “moving around.” But the decision is being “kept under review.”

Significantly, Pierce called the “greening of the economy” incredibly important, and the U.K. is working on green financing to help developing countries cope with the impact of COVID-19. She said the crisis should be used “as an opportunity to accelerate” the greening of the economy.

European Union

Paul Polman, chair of the International Chamber of Commerce, and former CEO of Unilever, said many European Union leaders are calling for a “greener, more inclusive and equitable world,” using the recovery from the pandemic to put in place the European Green Deal4. The Alliance for a Green Recovery includes 180 European politicians, business leaders, members of the European Parliament and environmental activists—plus 35 leading CEOs. They made the announcement April 14.

“As we think about an exit plan,” Polman said, “many are talking about redesigning the economy.” Moving to a green economy makes an “enormous amount of sense,” since it would unlock 26 trillion dollars, 65 million jobs and prevent 700,000 deaths a year.”

To meet climate change, moving to a green economy is “probably the [biggest] story of the century.” The pandemic is a “warm-up for the slower moving climate crisis” and is exposing how parts of society—people who are unprotected, poor or live in polluted environments—are more vulnerable.

Coming out of the pandemic, “we would be smart” to accelerate the green economy and that would create more jobs and better jobs and be better for bio-diversity, Polman said.

China

“China has suffered through the immediate economic impact of COVID-19 and is now working toward recovery5,” according to the New York-based Rhodium Group, a leading independent research provider. “Some initial signs are positive—the end of strict isolation measures means that people are mostly back to work and many aspects of economic life can resume, even if overall activity remains at a lower level.”

The gross domestic product growth projection has been downgraded from 6.1% to 2.6% for 2020, and external demand—the export of Chinese goods overseas—has weakened as economic conditions here in the U.S. and the European Union deteriorate.

Rhodium Group finds the Chinese the property sector (real estate market) a key to further economic flailing. Developers are struggling with financing and debt as demand deteriorates. “New construction starts fell 25.9% as migrant construction workers were kept off construction sites,” said the Rhodium Group report. “Developers also shuttered showrooms, pushing sales of finished homes down 32.7%. In response, property developers have started slashing prices.” More price deflation could come if buyers wait for prices to bottom out. The decline in the property sector would have impacts elsewhere, in steel, cement, plastic, glass and aluminum—“weighing down any potential recovery after the immediate effects of the outbreak and containment policies in China are past.” 

Although consumption of household goods and services might be the first to bounce back, the demand will remain weak, given problems in the manufacturing and exports, the report concluded.

Southeast Asia

Meanwhile, in southeast Asian countries, including India, Vietnam and Cambodia, it’s estimated that seven million, and perhaps up to 10 million jobs have been or will be lost because of the pandemic shutdowns6, according to William “Whit” Lloyd Visiting Fellow, in the U.S.-Japan-Southeast Asia Partnership in a Dynamic Asia program at the East-West Center in Washington. Ports in many countries there have been closed. The pandemic leaves open the question of how companies in those countries will proceed with increased automation: On the one hand, budgets are being hammered by the shut, on the other, robots don’t get sick.

Communications consultant H. A. Silliman can be reached at hsilliman@hotmail.com.

  1. “A Long Way To Go Before There’s Enough Testing To Reopen Economy,” Business Roundtable CEO Says, California Business Roundtable April 17 eNews.
  2. “Rethinking the Global Supply Chain,” interview by Jack Rogers, editor-in-chief of Business Facilities magazine, April 27, 2020.
  3. Global Translations Virtual Interview with Dame Karen Pierce, British Ambassador to the U.S.; interview by Ryan Heath, Politico.com, April 24, 2020.
  4. Global Translations Virtual Interview with Paul Polman, chairman of the International Chamber of Commerce; interview by Ryan Heath, Politico.com, April 17, 2020.
  5. Deconstructing the Virus Impact: How China’s Recovery Will Unfold,” Rhodium Group, April 10, 2020.
  6. “U.S.-Japan Cooperation on Vocational Training and Education in ASEAN,” East-West Center Virtual Seminar, April 22.