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from major global banks, consulting companies and economic think tanks. At the end of January 2020, the consensus expectations were that we would enjoy global GDP growth in 2020 of 3.3% - at the time of writing the consensus is that we can expect a global fall in GDP of between 6% and 10%. Even more alarmingly, there is a large amount of variability about the consensus expectation, and it is being regularly adjusted downwards as the COVID-19 pandemic continues.
Despite the grim forecasts for 2020 we would remind our clients that historically economies have typically recovered relatively rapidly after a symmetrical crisis (i.e. one caused by an outside event which affects all economies). Also, the population of working age, the productive engine of our society, are relatively lightly affected by the virus and therefore there is a reasonable prospect that when the unprecedented short term disruption has abated there should be no longer enduring effect on consumer spending and productivity as long as the economy is sustained. Of course, over the next few years economies will have to pay for the emergency measures currently being undertaken to sustain the economy but these measures are essential to ensure that there is an economy left to sustain.
Naturally, the patterns and rhythms of our society will change. Among many changes in emphasis post-virus we expect more remote working and online shopping, an increased focus on health care and digital solutions, but also a heightened awareness of privacy issues, a critical examination of the vulnerability of supply chains, a reduction in business and leisure travel, increased prominence for food security issues, and the continuing movement to renewables. There are likely to be many other deeper patterns which it is too early to predict.
For Slovenia this is its third economic crisis since independence and we believe that this time round it is better equipped for a quick recovery than most other countries. The social distancing measures were implemented early and comprehensively, and seem to be having a positive effect which gives us optimism that Slovenia is likely to be less severely hit than other countries in the region. We also believe that general business practices are much more in line with best international practice than they were in 2008. Most importantly, the measures of economic support being implemented are significant and have been announced early, giving businesses reassurance about operating once the pandemic is over.
Nonetheless for many businesses the next few months will be a severe challenge in managing customers, cash and employees. Revenues in sectors such as hospitality, non-food retail and travel have dropped to zero overnight, and the struggles to survive are very real. Albacore has extensive experience with assisting companies in crisis situations and financial restructurings and can assist you with our world class financial modelling expertise as well as help you to raise debt and equity to bridge any cash flow shortfalls and to position you for recovery and growth once the pandemic recedes.
“Strive not to be a success, but
rather to be of value.”
Albert Einstein
