REALITY OR JUST A FALSE SENSE OF HOPE?

The lack of any reasonable return of investment and lack of profitability also did not defeat the sense of optimism and that things would get better in a year or two.

The competitive adrenalin has flown through the management decision making for the past thirty years or more. Despite the lacklustre financial performance compared to other service industries, investment has always been at hand and insolvency few and far between thanks to the ownership structure within the industry, reliant as it is, on the state underpinning failing companies.

This remains true in the current COVID-19 crisis. The current recession, likely to match the World Depression of the 1930’s, is bringing about a financial impact that will be hard to survive (without state aid). Global GDP in 2020 will likely drop to minus 6.1 per cent for developed economies with an impact of trade according to the IMF Global Outlook.

The World Trade Organisation projects that nearly all regions will suffer double-digit declines in trade volumes in 2020, with exports from North America and Asia hit hardest with decreases ranging from 16 to 32 per cent.

Experts are, however, projecting that the crisis is waning, and that recovery is on the way. There is virtually a blind belief that we are through the worst of the crisis and that surely the recovery will come beginning in the second half of the year and building up to a strong resurgence in growth in 2021.

This collapse in the global economy is not economically or financially driven. There are no models available that can reliably predict what the coronavirus will do. We are not through phase 1 yet unless you believe President Trump.

The U.S., Latin America and Africa regions are still at the plateau with no sign of recovery. Europe, coming out of the 12 to 14 week lockdowns is experiencing a build-up of infections and deaths.

We should be extremely cautious with our optimism, this crisis may well drag on far longer than expected.