New world order to prevail post-coronavirus, says Bank of America

A “new world order” will emerge post the Covid-19 pandemic that will influence businesses and societies globally, according to Bank of America.

Covid-19's influence will extend “beyond the current lockdown peak”, said BofA, adding that unlike other crises, it will “leave the legacy of massive data and knowledge creation tools” in various sectors such as medicine, technology and social fields.

“We expect this pandemic to accelerate many macro trends that would have taken five or more years to play out before … we identify sub-segments across our big five themes that are well placed to benefit in the post Covid-19 world, with the total market capitalisation of $20 trillion (Dh73.4tn).”

The bank's five key trends are tech wars, geopolitics and globalisation, bigger governments, health and new consumers.

While global knowledge typically doubles every two to three years, BofA assumed that Covid-19 will be a “major data accelerator, speeding up thematic disruption from decades away to only years away for certain themes”.

The Charlotte-headquartered financial firm’s survey revealed that eight in ten respondents consider geopolitics as the key de-globalisation driver.

Whereas, over a third of the respondents expect diversification in supply chains and 50 per cent expect climate-friendly investments to increase post Covid-19.

The bank surveyed analysts from 3,000 companies spanning 25 sectors.

The virus outbreak, which has spread across the world in the past months, has accelerated structural shiſts in consumption, working and the use of technology, the lender said.

“The lasting legacy of this [Covid-19] will be a combination of new communication infrastructure, data generation, cloud computing power and bandwidth,” said the report.

This could pull forward commercialisation of moonshot technologies such as autonomous vehicles, quantum computing and vertical farming, as nations look to “get an edge in the race for tech supremacy and shiſting industrial and political priorities”.

Also, there will be a new social contract that will see bigger governments that will be more influential.

“Covid-19 has handed governments a new social mandate to protect their citizens … they will exert greater influence on businesses with shareholder supremacy potentially eroding in favour of stakeholders.”

Similar to funding post military-related and other crises, government spending on personal safety will remain elevated compared with pre-Covid levels for years to come.

Trends like work from home, e-commerce and stay-at-home activities (such as streaming and e-sports) could see increasing long-term adoption.

However, there are several short-term challenges.

Economic uncertainty may constrain overall demand and funding. Concerns over social distancing may negatively affect sharing economy platforms, BofA said. The lender expects the increased data tracking and personal monitoring will raise privacy and ethical concerns.

The report said that the Covid-19 experience will also amplify the importance of healthcare and accelerate other pressing global public health issues such as drug pricing, antibiotics resistance, future pandemics prevention and universal vaccines for all.

Globally, roughly 10 per cent of gross domestic product is spent on healthcare but 20 per cent to 40 per cent of this is wasted.

“A more efficient system that focuses on value-based outcomes, preventive care and greater use of technology such as big data, tele-health and wearables will be important in securing a healthier world population post-coronavirus,” BofA said.