Sales are worth the numbers – Newspaper Kommersant No. 203 (7404) dated 11/01/2022

The pandemic, as expected, not only led to a deterioration in the global GDP forecast, but also contributed to the rapid introduction of digital technologies. The question of whether digitalization can increase economic resilience and mitigate the effects of recessions is the subject of a study by economists from the International Monetary Fund (IMF). The authors of “Digitalization and Resilience” conclude that companies from more “digital” industries lose less revenue after a recession. Earlier in the 2021-2022 Global Computing Power Index Assessment Report, it was noted that as digitalization accelerates, the digital economy will become the main driver of global economic recovery and a source of growth.

Digitization in the medium term can help prevent the devastating effects of economic downturns. This is the conclusion reached by IMF economists Alexander Kopesteik, Julia Estefania-Flores and David Furseri in the study Digitalization and Sustainability. Based on quarterly balance sheet data from 24,000 companies in 75 countries, the researchers found a link between the perceived level of digitalization and company revenue losses over the medium term: the higher the former, the lower the latter. Moreover, early post-pandemic evidence suggests an even greater importance of digitalization in the context of widespread social distancing, and this connection has been confirmed for a wide range of technologies (robotics, online sales, etc.).

The pandemic is not only a source of significant and persistent negative consequences for the economy, but also the reason for the accelerated introduction of digital technologies in production. Thus, according to the latest IMF forecasts, the projected level of global GDP for 2024 will be 5.3% lower than expected at the same time in January 2020, the researchers note. Among the positive consequences, they note the rapid adoption of new digital technologies – from teleconferencing to software for e-commerce platforms, as well as the spread of remote and hybrid work models for employees, online interaction with counterparties and contactless transactions for company customers.

Economists have tried to explore and quantify the role of this accelerated digitalization in changing the resilience of the economy to recessions, both to typical recessions and to double shock situations, as in the case of the COVID-19 pandemic. To do this, the losses of firms in digital industries were studied in comparison with traditional businesses. “Our results show that digitalization significantly reduces sales losses. In particular, we find that four years after a typical recession, firms in industries that are one standard deviation more digital than average have a 2% smaller drop in sales than the average for firms in industries with medium levels of digitalization.” IMF economists point out. At the same time, the researchers state that the work may even underestimate the true impact of digitalization.

Note that earlier in the report on the assessment of the global index of computing power 2021-2022, prepared by the research company IDC commissioned by the Chinese server supplier Inspur, the important role of digitalization in the recovery of the global economy was also noted. Thus, experts pointed out that it is the figure that will become the main engine for the recovery of the world economy and a further source of economic growth. According to experts, the share of the digital economy in GDP will approach half (48.1%) by 2025 against 44.6% in 2020.

Venera Petrova