- Executives need to address swiftly the specific challenges related to their own industries and, more specifically, their own companies.
Our data backs this up. The same IMD Executive Opinion Survey in 2021 showed that business leaders were concerned with broad global issues such as the COVID-19 pandemic and environmental sustainability, both of which necessitated public-private coordination. Companies were implementing, and sometimes strengthening, existing governmental regulations.
In contrast, in 2022, executives are focusing more on businesses’ operational issues, placing 2021’s concerns at a much lower priority level. Take the issue of environmental sustainability, for example: it moved from being the second highest concern (60% for the top five most highly ranked economies) in 2021 down to eighth place (14%) in 2022.
- During the pandemic, technologies that have facilitated the virtual connection of people and e-commerce have allowed many markets to work effectively. Companies must now look into how technology can be adapted to keep pace with 2022’s new set of priorities.
Executives must draw upon newly embedded digital technology from the pandemic along with expanding investment in artificial intelligence and machine learning to assist their teams in confronting the current challenges. Technology helps improve transparency within a company which enhances the understanding, for example, of cost spending; an important first step in tackling inflation. At the same time, transparency eases a very complex process as the supply chain becomes more manageable.
Most importantly, technology improves the accuracy of estimating everything from future demand and costs to supply chain challenges. It allows retailers to have an accurate understanding of their inventory and to estimate subsequent orders more accurately, and to better understand future challenges in a supply chain.
- Tighter fiscal and monetary policies are required in order to manage inflation. At the same time, governments need to navigate a fine line between controlling inflation and avoiding a recession.
The combination of governments performing tax hikes and central banks increasing interest rates will result in reduced demand for goods and services, as well as a decrease in investments which will place downward pressure on prices. At the same time, and as previously mentioned, a decrease in estimated economic growth means a potential recession. And the increase in the price of energy worldwide may lead to higher levels of inflation and a recession. Economies are working hard to avoid this combination.
The major disruptions we have experienced globally since early 2020 have not, in fact, affected the traditional pillars of competitiveness: the rule of law, institutions and the underlying processes for investment in infrastructure and education. Whether these pillars of competitiveness will continue to be the most significant in the face of the triple onslaught of today’s unpredictable health, economic and geopolitical crises will become clearer over the course of time.