By Janelle M. Lewis, Attorney, Business & Legal Strategic Consultant
Here are some highlights from an interview with Pierre Ferragu, Head of the Global Technology Infrastructure Team at New Street Deal, on HBR Presents, as he discusses the impact of the Covid-19 pandemic crisis on tech companies from an investors perspective. His discussion helps to provide greater clarity on the emerging economic crisis, the uncertainties that arise as a result, and what we can expect post covid-19 when the global economy resumes.
Current Economic Situation
- There is a high point of uncertainty because this crisis started locally, affecting the Chinese market, to a global lockdown.
Comparative Differences Between the Current Emerging Economic Crisis and Previous Crisis
- What makes this emerging economic crisis different from other economic crisis is that while the economy, characteristically healthy, came to a complete halt disrupting the supply chain while economic capacity still exists.
- During previous economic crisis, specifically, the global financial crisis and the dot.com crisis, one of the following elements were present:
- Overheating of the economy, such as too much investment or too much supply but not enough demand. Resultantly, economic capacity was destroyed and the economy collapsed. Economic recovery resulted in rebuilding capacity to drive growth.
- A particular catastrophe, such as war somewhere in the world, causing high destruction. In this case, reconstruction is the driver of growth.
- The emerging economic crisis is something that we have never seen before, so it is very difficult to forecast the shape of recovery. Rebuilding or reconstruction can’t be used as tools to drive economic growth because there is nothing to rebuild or reconstruct since capacity still exists.
Post Covid-19 and Ferragu’s Postitive Outlook
- We will see countries start to diversify their supply chain and increase the rate of insourcing within their borders, which will in turn increase innovation as countries look to achieve quality, performance and cost-efficiency in manufacturing when they shift some of the production to the domestic markets. This will protect countries from the next crisis.
- The emerging economic crisis will accelerate the next generation of technology infrastructure, like cloud computing and e-commerce.
- Ferragu also sees the gig economy accelerating post Covid-19 because the will be economic capacity to meet the projected high rates of unemployment. Additionally, the technology infrastructure will benefit from fiscal stimulus.
To hear this interview in full on HBR Presents click this link.