New Normal aims to help you identify the key changes in the wider landscape that will impact you and your business.
First there was the pandemic and associated supply chain chaos. Then this year has seen the rise of ‘Putinflation’ as Russia’s invasion of Ukraine creates a growing risk of energy, food and financial crises.
“We are facing the biggest crisis the post-war Federal Republic has ever had. We have to be honest and say: First of all, we will lose the prosperity that we have had for years.”German Employers Association President, Rainer Dulger, 13 July
Risk management is key to survival, and future success
Scenario planning, based on a wide range of potential outcomes, will be key to success given today’s levels of volatility. We can no longer simply tweak a base case to reflect whether we are feeling marginally more optimistic or pessimistic.
Recession till 2025. We need to be realistic about the outlook and not assume the current recession will be over by Christmas. The issues we face are more likely to take years to resolve as they involve deep-seated problems
China is changing. It has bankrolled global growth since 2009, but now its model is shifting to self-sufficiency, alongside a major move into recycling to meet Net Zero targets. Its real estate market has been ‘subprime on steroids’ and its bursting will have far-reaching consequences for the global economy
Food shortages. As Sri Lanka’s suffering has shown, social unrest is rising around the world as food shortages increase along with prices for other essential goods. In turn, this will inevitably destroy the myth that demand growth in developing countries can somehow balance the downturn in developed markets
Invest for the future. Recession will accelerate the transition to a Net Zero economy. The invasion is already reducing fossil fuel demand. And demand patterns are changing very quickly as people refocus on ‘needs’ rather than ‘wants’.
Some of these changes are already becoming obvious, such as rising levels of debt and the threat of inflation. Others are still to appear. These relate to the way behaviour is changing in response to the Covid pandemic and the Ukraine war in 5 key areas where major paradigm shifts are underway:
The lockdowns have broken down the inertia surrounding work and home-based routines…
Global supply chains have proved very fragile during the pandemic. They have collapsed…
Energy markets are seeing a major paradigm shift, with the pandemic and the Ukraine war accelerating the shift to renewables…
The need to reshore supply chains in a world of potential energy abundance suggests that moves towards a circular economy will accelerate…
Many manufacturing operations still operate as they would have done 500 years ago, or even 50 years ago…
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