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How Digital Tech is Saving the World From an Even Bigger Economic Crisis

GDP

As World is observing one year of Covid-19 spread and subsequent restrictions for containing its spread, one area that has drastically changed the way we live and work is the use of digital technologies, including Internet and communication technologies. A recent estimate by research firm 5Jewels Research, Digital Technologies saved around 20% of World GDP from getting wiped off in the last one year, since Covid-19 restrictions started rolling out in March 2020 in many parts of the World.

It’s digital all the way

Most businesses and economies around the world switched to remote online or virtual mode almost overnight during this one year of restrictions. In other words, digital technologies enabled many economic activities to continue globally through Work from Home by using ICT and Digital Platforms.

“It is estimated that in just last one-year, Digital Tech. has delivered a saving worth over $17 trillion in the Global Economy, which is around 20% of the World GDP , during Pandemic related lockdowns and restrictions, as many economic activities continued in On-Line and virtual mode through various Digital Tech.” Chief Analyst of ‘5 Jewels Research’, Sumant Parimal, a Global Technology Analyst said.

“There is high co-relation seen between state of Digitization and loss in GDP during recent Pandemic driven disruptions. GDP Losses are lesser for the economies like U.S., China, and other Advanced Economies, where investments in Digital-ICT adoptions were high, making them highly Digitally Enabled Economies.

Parimal said that a country to watch here is Estonia where digitization level is beyond 90% and it saw minimum disruptions in its economy as its transitions was smooth from pre-pandemic era to post-pandemic era because most of the services were already available in On-Line mode before pandemic outbreak.

There’s no doubt that the adoption of digital tools advanced by five years in a matter of eight weeks—and analysts believe that is what buffered us all from an even more devastating economic collapse.

Another newly released International Monetary Fund data projects a global economic turnaround of around 5.5% growth in 2021. Every country in the G-20 is projected to grow and eventually return to its pre-pandemic state. The optimism is partly predicated on an effective vaccine rollout, but much of it hinges on digital ecosystems playing their part.

GDP Losses lesser for advanced economies

The IMF report noted that on the flip side nations with better digital readiness experience greater economic resilience during the  meltdown. Tufts University’s Fletcher School, found that the more digitally evolved economies tended to derive a larger share of their GDP from high-tech and information services sectors and the more significant portions of their workforce could shift from offices to working from home.

GDP Losses are lesser for the economies like U.S., China, and other Advanced Economies, where investments in Digital-ICT adoptions were high, making them highly Digitally Enabled Economies. As per the 5Jewels Research report too, “US derived a saving worth 22% of its GDP and India derived a saving worth 14% of its GDP due to digital tech they adopted during pre-pandemic period and during last one year of pandemic period, which itself created positive ROI for cumulative last five years of investments done in adopting digital technologies by various Enterprises, Businesses and Households in these two countries.

India however has witnessed one of the highest adoptions of digital technologies. According to a new survey from EY titled: ‘Embracing Digital: Is covid-19 the catalyst for lasting change?’ over half of respondents in India have increased their use of digital technologies and data solutions since the outbreak of the pandemic. About three fourth of the respondents reported positive experiences with digital technologies and data solutions, leading to better collaboration and efficiency in the operating model.

At the same time, government initiatives like Digital India, Aadhaar, GSTN, and Smart Cities have provided a significant boost to the country’s digital transformation drive.

Nonetheless, globally this one year of pandemic period has accelerated adoption of digital technologies by various enterprises, businesses and households, ensuring that any future pandemic wave like what we witnessed last year keeps economic losses minimum by enabling better business continuity through digital technologies.

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Sohini Bagchi
Sohini Bagchi is Editor at CXOToday, a published author and a storyteller. She can be reached at sohini.bagchi@trivone.com