Pillars of the Post-Pandemic Economy
SOVEREIGN WEALTH FUNDS 2020
10 Pages Posted: 28 Mar 2021
Date Written: 2020
The COVID-19 pandemic has had profound effects on economies around the world. The total economic impact of the pandemic, in terms of loss in gross domestic product, could be as much as $82 trillion, and many governments will be facing budgetary shortfalls for years. The ultimate impact is expected to be much greater than the financial crisis of 2007-2008 in both size and scope.
While nearly every country in the world has experienced tremendous human and economic costs from the COVID-19 pandemic, some countries struggled more than others, both in their efforts to contain the virus, and in developing a financial response. Lockdowns resulted in severe oil price declines, and the currency values of a number of developing economies plummeted in the early weeks of the crisis.
Sovereign investment practices will undoubtedly change as a result of the severe economic shock of the pandemic. But in some cases, the pandemic did not instigate change so much as hasten changes that were already underway. Importantly, the pandemic has highlighted the importance of logistics, both in terms of how physical goods are stored and delivered, but also in how digital goods, such as Netflix films or work files stored on company systems, are accessed on demand from housebound consumers and workers.
This review, prepared for the 2020 Sovereign Wealth Funds Report, describes how the pandemic has been both a tipping point and an accelerator for permanent changes in the way we eat, shop, and work. All of these changes will bring opportunities, however, and sovereigns are working to both take advantage of these changes to secure investment gains for their portfolios as well as to effect permanent changes in their economies to support development over the long term. The full report is available at: https://www.ie.edu/cgc/research/sovereign-wealth-research/.
Keywords: sovereign investment, logistics, supply chains, strategic investment, foreign direct investment, investment laws, foreign investment screening
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