GOODBYE 2020. WELCOME 2021!
The year 2020 gave us a medical crisis and a financial upturn – which is better than we feared, writes Tor Wallin Andreassen in BT.
Tor Wallin Andreassen is a Professor at the Department of Strategy and Management and Director of the DIG research centre at NHH.
Not since New Year’s Eve 1999 and the technical challenges relating to the turn of the millennium have so many wondered what the new year will bring. It may be time for a look back at the unusual year that was 2020.
Today, we are all full of admiration and respect for the highly skilled heads of the Norwegian Institute of Public Health (FHI) who have advised the Government, which in turn has made some wise decisions. We have documented the importance of a high level of trust in society. We have also documented the importance of a financially sound public sector. ‘Health before the economy’, has been the mantra. Sweden tried to strike a balance between the two, without succeeding.
It is still important to remind everyone that no one is safe until everybody is safe.
The number of furloughed workers and unemployed people increased strongly in the wake of mobility restrictions and social distancing requirements. The restrictions hit the BEACH sector –booking, entertainment, airlines, cruises and hotels – particularly hard. According to the online publisher Visualcapitalist, investors suffered losses corresponding to USD 332 billion during the period from 19 February to 24 March. Although many of these companies have since regained their ground, many are still suffering. The good news is that the situation will change as soon as we are allowed to travel for pleasure again.
The trend of decreasing oil prices was reinforced in 2020. April was the first time in history that oil prices dropped below 0 – zero! In other words, the oil producers were paying buyers to store oil. Many people consider this good news because low prices lead to reduced oil recovery. Failing demand and price wars were two of the most common explanations. The beginning of the end of fossil fuel was accelerated in 2020.
The year 2020 was also the year when those who could were asked to work from home – which was fun at first. Nine month later, we have never missed our colleagues more. It should come as no surprise that we have never worked more than we do at the moment – as much, in fact, as an extra day a week, according to OWL Labs. The effects are tangible. A Wharton study showed that, while productivity increased at the home office, innovation slowed down. This confirms the notion that creativity is born and thrives in dialogue with other people.
The home office has its advantages and disadvantages. The advantages are flexibility, the possibility of working from other locations, reduced travel time to and from work, and more time together with the family. The negatives sides are blurred lines between work and leisure time, loneliness, and the lack of dialogue and interaction with colleagues. Video conferences is something we’ve become good at.
The videoconferencing company Zoom, which few people (if any) had heard of before 12 March, has skyrocketed on the stock market. The company is currently worth around USD 50 billion, which is more than the airline companies Southwest, Delta, Lufthansa, United, IAG and American Airlines combined. That the share price fell by 25 per cent when the Pfizer vaccine was announced on 9 November speaks volumes about these pandemic-sensitive stocks.
The pandemic also meant that customers and the general public were unable to come to the service providers, so instead, the suppliers had to come to them. Today, doctors and psychologists offer consultations via TEAMS or Zoom. Musicians stream their concerts. Online retailers such as Komplett.no and Amazon and tech companies such as Facebook, Netflix and Google have had a good run lately.
Increased demand for digital services was not least visible on the US S&P500 index. Excluding the FAANGM stocks (Facebook, Amazon, Apple, Netflix, Google, Microsoft), the index has increased by 70.9 per cent since March. When we include these tech giants, the index rose by 110.2 per cent. The FAANGM stocks alone have increased by a total of 503 per cent during the same period. In other words, many investors have made a fortune during the pandemic.
Towards the end of the year, we learnt that we will soon have access to a vaccine. You would think most people were looking forward to that. But no! Strangely enough, a survey conducted by the World Economic Forum revealed a negative trend from August to October in the number of people who say that they will get the vaccine when it becomes available. The negative trend is especially pronounced in countries like China, Brazil, Australia, the UK, Japan, Spain and France.
The year 2020 was well and truly a year like no other!
This op-ed was first published in the newspaper Bergens Tidende on 29 December 2020.