WHAT TO EXPECT IN 2020: CHANGING INDUSTRIES AND CHALLENGES FOR C-LEVEL
As the World Bank has already announced: “The global economy will experience a slight upturn if all goes well”. However, those of us who move in the big global markets know that it takes much more than only “good intentions” so that what must go well will indeed happen. Otherwise, we may be faced with the much-heralded global recession, which seems to have taken a mere recess.
After a difficult 2019, major industries are eager for an upturn. However, the risks of last year are still present and some have even become more acute. We talk about recession in emerging markets, the trade war between USA and China, the completion of Brexit, and the disputes with Iran, whose most recent chapter has the free world on edge with the threat of new armed conflicts.
Meanwhile, this year, global growth is expected to increase by 2.5%, especially in emerging markets that manage to emerge from the recessionary period and that registered growth higher than the 1.6% projected for advanced economies, due to weakness in the area of manufacturing.
In this way, we have checked the changes that are expected in the main industries worldwide and what challenges these transformations mean for C-level executives.
It will benefit from the recovery of developing markets. However, sales will be pressured by the increase in taxes that the United States imposes on vehicle manufacturing countries such as Mexico, Germany, Japan, South Korea and China.
In the case of Europe, it remains to be seen how the industry will react to the completion of Brexit, especially as far as UK car manufacturers are concerned.
Global tensions will impact large consumer industries, putting an unwieldy weight on the retail sector which is foreseen to grow by 2.2%, compared to 2.5% from last year.
However, we should read the fine print. Although in terms of volume, sales will tend to decline. A 4.8% growth expressed in U.S. dollars is expected for sales.
Asian markets, for example, will experience a rise in prices of some goods, due to the China – U.S. tension, and Internet retail sales will also have a positive impact on global inflation which will tend to fall.
In fact, increased online competition is one of the concerns of high executives. However, it can mean an opportunity for expansion for those willing to invest in digital presence to increase sales.
This is one of the most challenging sectors due to the increase in regulations and the mandate to meet ecological objectives in the short and medium-term. On the other hand, the presidential elections in the U.S. in November of this year is an element to consider within the projections of the oil industry. However, no significant drop or increase in oil prices is expected.
Where considerable growth will be experienced is in the renewable energy industry, so investment in the circular economy and the adoption of new types of energy are some of the challenges that business leaders will face this year.
If leaders are not already thinking about new consumption strategies, perhaps this fact will convince them: global energy consumption will increase by 1.8% by 2020, with a major emphasis on renewable energy.
It does not seem that the slow increase in global growth will have an impact on this sector, except in digital banking. In fact, the weakness of the advanced economies will keep low interest rates and the political situation will keep important financial centers such as London and Hong Kong fragile.
However, digital banking will be key to increasing financial inclusion (banking penetration) in emerging markets, with Asia leading the way in banking expansion and lending.
This is another area where the U.S. presidential elections will have a major impact. Debates on healthcare reform and drug pricing are critical issues for the sector. Health spending is expected to increase by 6.2%, while pharmaceuticals will grow by 3.1%.
Investments in 5G and fiber services will be the priority in 2020, despite uncertain returns due to regulations. Global mobile lines are projected to “increase by 3%, fixed lines by almost 2% and broadband subscriptions by 6%,” according to the Economist Intelligence Unit.
Challenges for C-Suite in 2020
Despite conflicting and varied forecasts, business leaders will be able to recognize a competitive environment with untapped opportunities if agility and adaptability guide them through complex business and political transformations.
Faced with such complex scenarios and with few certainties as the current ones, most business leaders prefer not to make big moves until they have things more clearly in hand. This caution is desirable, however, inaction and the risk of stalling in the face of change must be prevented.
One of the main challenges in achieving this is to focus on the execution of the strategy. Only 46% of high executives are confident that their efforts are aligned with strategy, while only 30% of strategists are confident that they are doing what it takes to put plans into action. In this context, the effective execution of strategic plans becomes a powerful competitive advantage.
Another challenge for C-Levels this 2020 will be to prepare to manage disruption. Managing change does not mean seeking stability but knowing how to overcome crises and emerge stronger from them.
In this kind of constant calisthenics in which CEOs anticipate opportunities and invest in making their organizations flexible and adaptable enough for changing conditions, information and agile preparation for investment are key. At Credit Report, we specialize in providing valuable, current and timely information to make timely decisions in an environment where every minute counts and costs.