With declines in tech and retail stock prices, rising inflation and interest rates, and persistent supply chain issues, so far, 2022 is turning out to be gloomier than anyone’s expectations about a Covid-recovery economy.
FREMONT, CA: The recent decrease in stock values of technology companies serves as a reminder of the dot-com bust in the early 2000s. The 78 per cent loss in Nasdaq from March 2000 to October 2002, which was followed by a recession, is strikingly comparable to the current decline. Not just technology stocks are experiencing stock price reductions. Retail stocks, a leading indicator of the overall health of the economy, have likewise lost a third of their value since recent highs. A U.S. recession, as well as a worldwide recession, are now being predicted by economists. In addition, interest rates have increased and are likely to occur soon. Credit is getting harder to come by. China's zero-covid policy and Russia's invasion of Ukraine continue to be major concerns for the supply chain. So far, the outlook for a Covid-recovery economy in 2022 is looking bleaker than anyone had anticipated.
A natural inclination is to reduce expenses across the board by delaying new projects, lowering discretionary spending on things like employee training, R&D, and marketing, freezing new hires, and lowering headcounts. Furthermore, one can mistakenly believe that the digital revolution is over because digital equities have experienced the sharpest price decreases recently. As a result, some businesses may begin to scale down their efforts to change their businesses digitally.
While business competitors are cutting services, a recession is an ideal opportunity to gather resources for the upcoming expansion. Talent, the largest and most significant resource, is more easily accessible now than it was during an expansionary phase. The same talent that was joining startups or fintech and enjoying sizeable bonuses and stock options is now looking for steadier employment opportunities as firms cut R&D and new projects, reduce headcounts, cut down employee salaries and bonuses, and falling stock prices pull stock options under the water. Additionally, it's a good time to purchase businesses and assets at fire-sale prices. For instance, several biotechnology companies are up for sale for less money than they have in cash. Big pharma has increased its purchases of wearables and other digital health devices as a result. In addition to gaining workers and assets, it is the ideal time to increase market share by luring disgruntled customers away from rivals that are scaling back on customer service.
A decline in digital stock prices does not mean that the digital revolution is over. Nearly every business has a digital strategy, which allowed businesses to continue operating normally throughout the Covid. The advantages of a well-considered digital strategy are well known: better resource visibility and management, increased flexibility and organisational agility, lower costs, improved supply chain management, better customer experience, increased productivity, quicker product development, and superior human resources planning. These advantages still exist even if the stock values of digital enterprises plummet. The pace of digital transformation cannot be slowed now. Instead, now is the perfect time to speed things up. More problems are emerging as a result of the unstable climate, which can also present opportunities that support digital transformation. Consider typical retail businesses as an example. These businesses are now dealing with complex supply chain difficulties that are degrading their ability to fulfil orders and driving up expenses. Though it may not eliminate issues, digital transformation can aid in reducing them. Retailers can use machine learning, for instance, to track consumer preferences and buying trends, change promotions and special offers, personalise product recommendations, adjust pricing instantly, and balance supply with rapidly shifting demand.