Bruno Rosa, Journalist from the Business section of newspaper “O Globo”
The prospect of mass vaccination around the world in order to slow the progress of Covid-19 brings some optimism to companies and consumers for the year 2021. In Brazil, the largest economy in Latin America, the pandemic caused a reduction in industrial activity, raised unemployment and, what is most striking, increased uncertainties given the political instability experienced throughout the year 2020.
But now it’s time to look to the future. The expectation is that the Brazilian economy will grow 3.5% in 2021, according to the Brazilian Central Bank forecasts. This will not suffice to recover from losses of almost 5% expected for 2020, but is an important encouragement if we take into account that the task force around vaccines should increase consumer confidence.
The US elections, after the Joe Biden’s victory, should help bringing more optimism to the governments of the European Union, ease relations with China and give geopolitics in Latin America a new face. And this new atmosphere of dialogue tends to boost investments by companies, generating more jobs and increasing consumption.
From the energy sector to the technology sector, new habits accelerated due to the coronavirus pandemic and generated new trends. This tends to lead to a new investment cycle. In the oil and gas sector, sustainability joined the list of concerns for good, forcing companies in this sector to transfer their oil drilling resources offshore to solar and wind energy projects. Oil companies have been adding projects from new sources, such as garbage and further waste, to this list. Anything goes to go green.
In the technology sector, 5G is here for good. After the global dispute between the United States and China, the fifth generation is no longer a promise and is already becoming a reality among companies that started allocating a few million euros to connect their manufacturing units around the world.
The consumer, who started working from home in most parts of the world, given the constant lockdowns, required internet with a high quality connection and became more demanding when it comes to consume. The environmental issue is now on everyone’s agenda and tends to become more and more relevant.
In Brazil, these issues have become crucial. And, even with the crisis generated by the pandemic, the country relies more now on investment at a pace that is due to increase for the coming years. The healthcare sector gained prominence everywhere in the world as companies began investing in application solutions and creating departments to help their employees get through this moment.
Companies and consumers also started to value gender and race equality more, an issue that forced companies, above all, to increase investment in a diversified workforce within their companies.
The pressure around the Black Lives Matter movement in the United States, and events like that in Brazil, where employees of a French retail chain killed a black consumer, made the issue more pressing as events like these have the potential to tear down, overnight, the reputation of brands and cause billionaire losses.
This means more investment as regards recruiting different professionals – from executives to blue collar teams. In Brazil, many companies are now hiring consultants to look for black, transgender and indigenous professionals. And this brings more optimism in the post-pandemic world, where concern for the environment and a more egalitarian society go hand in hand with investment plans and product and service launchings.
But there are economic challenges. Cost cutting and spending rationalization are on the agenda for the next decade. The movement as regards mergers and acquisitions around the world tends to gain momentum. Multinational companies will seek to unite operations, buy rivals and gain scale.
Start-ups also grew in the pandemic and became an option for giant companies facing the dilemmas of digitisation, a point of no return in the production process.
Cell phone apps have multiplied in the field of gastronomy, transport and are now established in industries hitherto traditional, with solutions capable of measuring the level of oxygenation in the blood or measuring the level of productivity of employees. At byte speed, the global economy has come up with new ways of doing business like Bitcoin, generating, in turn, additional opportunities.
In Brazil, a continental-sized economy, the movement of mergers and digitalization has already gained momentum in all sectors. Unlike developed countries, nations like Brazil still suffer from a precarious infrastructure and high taxation, hence the growing need for more efficiency. And this need has been attracting international capital. In order to take advantage from such interest, a privatization program carried out by the government, coupled with the promise of a reform agenda, is due to benefit from billions of dollars from abroad as concessions are being sold on roads, railways, airports and the sanitation sector.