The coronavirus has stopped the clocks. Over a period of many weeks, public life has literally ground to a halt. We now have a crisis of global proportions that has both a public health dimension and an economic one. It is still unclear just how the pandemic will play out. But one thing is certain: the global economy will slide into a deep recession this year. The IMF forecasts a contraction of three percent. A lot of companies are in dire straits; some have already had to file for insolvency. In addition, there are stark regional differences, as evidenced by the figures for automobile sales: in the UK, for example, there were virtually no new vehicle registrations for the whole of April and well into May; in the Chinese market, however, sales for the BMW Group over the same period were higher than the previous year. In this situation, we need to ask ourselves about what might guide us in our attempt to steer companies and national economies back onto the path of growth and normality.
In a time of deep cuts and great uncertainty, decisions can have far-reaching consequences. It is therefore all the more important to ensure that the right decisions are made. Growing uncertainty can also lead to conflict about what is – or might be – the right way forward. It is up to those who lead to guide us across this unfamiliar terrain, to resolve conflicts and, especially now, to make sound decisions in preparation for the future.
Comprehensive data can help improve decision-making
Today, more than ever, we have access to the kind of extensive data that can help us improve our decision-making is better than ever. We need to take current market-forecasting models and supplement them with general data on, for example, the current status of pandemic research, best practice in crisis management, and measures adopted by individual regions. Live data on people’s mobility and purchasing behavior as well as analytics on consumption, mobile working, travel and the use of public transit can all provide indications on the return of economic and social life. There has been an upsurge in digitalization, accelerated by the crisis, which is having a positive impact in many areas of society. It will make us more flexible and adaptable and therefore more resilient following this crisis.
Lots of companies are facing sharp cutbacks – including the BMW Group, which is now reviewing a host of projects. It is vital, however, to continue with the advance development of technology. Technology that is now at an early stage will provide us with an innovative edge in years to come. But any projects that are halted now may well be lost for ever. This means investment in vehicle software, including next-generation operating systems and connectivity. It also means investment in digital infrastructure and, as a concrete example, quantum computers, a project that Fraunhofer is helping to take forward on the European level. By contrast, traditional investment in fixed assets is easily postponed, without weakening a company’s innovative strength. On the political level, this means that the current state investment to safeguard the existence of companies must be supported by a framework that will enable companies to grow of their own accord and without state support, and that will create a climate in which innovation can flourish. After all, the reason why many industries are now in difficulties is not because their business model has failed, but rather because decisions made by the authorities have prevented them from going about their business.
Europe’s greatest strength lies with its citizens – in their inquiring minds and pioneering spirit, in their creativity and in their freedom of thought. We should encourage this and give them the greatest possible scope to develop and flourish, so that Europe emerges stronger from this crisis. This means positive initiatives rather than blanket bans, and greater investment in education and research instead of a future redistribution of income and wealth.
Opportunity for a real educational advantage
Adjusted for purchasing power, Germany’s expenditure on education per full-time student is higher than the OECD average. Yet measured in terms of economic output, Germany’s spending on establishments of formal educational represents 4.2 percent of GDP, well below the OECD average of 5 percent. So there is room for improvement, especially in the area of digital skills, where we can achieve a real educational advantage. That will make our economy more adaptable, more responsive and better equipped for the future. We therefore have what it takes to build up a high degree of resilience.