The COVID-19 crisis is likely to accelerate many underlying, secular disruptive forces already affecting economies and financial markets. This may only increase the difference between those companies, sectors, and countries that are being disrupted, and those that are acting more like disruptors. Distinguishing between the two is becoming crucial.

In our Secular Forum last year, we identified six main secular disruptors that would challenge economies and global markets over the next three to five years: the rise of China, populism, aging populations, technology, financial market vulnerability, and climate change. Twelve months later, the tragic path of COVID-19 may amplify and accelerate some of these dynamics, despite the sheer size of the policy response.

Central banks and financial authorities have reacted with extraordinary measures, both in terms of magnitude and speed. These actions have lifted markets. Yet, the global number of COVID-19 casualties continues to rise and gross domestic product (GDP) numbers are experiencing record declines. The ramifications of this pandemic may be felt for quite some time, reflecting the broad weakening in fundamentals and because the secular disruptive forces that were already in place have been invigorated.

Let’s focus on just two examples:

  • Technology: Approximately half of humanity has been or is still under some degree of lockdown, and for those who can access it, technology has become an even larger necessity – from online shopping to virtual workplaces and video conferences. Estimates of internet usage are up 40% since the start of the year across major economies, especially in sectors including retail, education, healthcare, leisure, and entertainment – Google’s top three searches in the U.S. through 12 April are Facebook, YouTube, and Amazon. In the meantime, businesses have rapidly adopted and rolled out cloud-based services to facilitate continued operations: One large U.S. remote-working service provider reported a 22-fold increase in the use of its platform in China through March of this year, while downloads of Zoom’s online video conferencing service jumped 141% in March versus February of this year. This crisis has prompted and accelerated the integration of technology into many of our daily lives (see Figure 1).

Figure 1: The rise in online usage of the internet as observed by Cloudflare, a web-infrastructure and website-security company, as lockdown measures have been introduced globally.

  • China’s ascent: China’s economic strategic plan, Made in China 2025, is a blueprint to upgrade its economy to higher-value-added manufacturing and services. With an ambitious breadth covering sectors including robotics, information technology, electric vehicles, and machine learning, and hundreds of billions of yuan of government support, the aim has been to move beyond the “world’s factory” and gain greater self-sufficiency. This has become increasingly pertinent, as global trade has been in decline since the 2007-08 financial crisis, and U.S.-China tensions have recently renewed. Each country’s desire to protect its workers from foreign competition and shorten supply chains may further reduce world trade and push deglobalization. Less trade between the world’s two largest economies may also accelerate their competition to dominate technological development, stepping up the race for innovation in, for example, 5G and the robotization of services, including medical ones.

As restrictions are lifted, economies will ultimately recover from the pandemic-induced recession, but it is questionable to assume that everything will go back to the way it was. As old inefficiencies are identified and new preferences developed, the changes that the COVID crisis has led to might be more permanent than we think and have more consequential implications.