The Edge of Risk Menu Search
New thinking on corporate risk and resilience in the global economy.

Quick Takes

GDP Growth Depends on Far More Than Investment

Source: World Economic Outlook Database, IMF

Average gross domestic product (GDP) per capita in Latin America has not grown consistently since 1990. However, in the last 30 years, GDP in Asian countries has grown fourfold — in part due to investor activity, according to a paper from the International Monetary Fund. 

Over the past two decades, Latin America has received far less investment compared to Asian countries — but more than European countries, and Europe saw growth in GDP during the same period. Europe’s growth resulted from institutional reforms, meaning the relatively low GDP growth in Latin America is due to factors beyond investment.

The combination and quality of human capital, business climate and governance is what makes a difference: “In countries where property rights are not secure and governance is poor, firms will remain small and productivity low,” the paper notes. IMF analysis found that Latin American countries score low on both human capital and strong governance, making low investment in Latin America the result of low growth — not the cause. “Governments solely focused on boosting investment might want to look at the problem from a different perspective,” says the IMF.

Increased Productivity Among Employees Takes a Toll on Mental Well-Being

Source: The Conference Board

Almost half of U.S. companies surveyed reported growth in productivity among their employees during the coronavirus pandemic — a 24% increase in the number of companies compared to April. Sixty percent of companies surveyed believe employees are working longer hours, according to The Conference Board, which surveyed over 300 U.S. companies in September. 

However, 42% of organizations note an increase in employee burnouts, 46% of organizations note a decrease in work-life balance for their employees and 40% of organizations note an increase in mental health problems. The report says that business leaders are questioning the long-term sustainability of these new working practices. “Managers should be more aware of and proactively limit the number of hours their employees are working.”

As remote work continues indefinitely, some business leaders are looking for new ways to support their employees’ well-being to help lower the likelihood of burnout by encouraging vacation time, offering benefits that are relevant to our new way of working and implementing quiet time throughout the workday. 

What Makes Travelers Feel Safe Enough to Fly?

Source: Oliver Wyman

Those traveling by air while the pandemic continues want to see cleaning, mask mandates and an empty seat next to them in order to feel relatively safe, a survey by Oliver Wyman shows. “Although the travel industry has been focusing heavily on ‘touchless travel,’” according to Oliver Wyman’s analysis, “this does not appear to be resonating strongly with travelers.” 

More than 4,600 people across nine countries were surveyed, and at least half of respondents believe their long-term travel habits will change after the pandemic: 43% of respondents who travel for business plan to travel less in the future — up from 27% in the spring. The survey also found that travelers are relying less on government and public policy and more on personal risk assessment when determining when it is safe to travel again. 

Industry leaders predict that international traveling could take years to recover, but for now, airlines have been focusing on how to help travelers feel safe enough to fly. 

How Will the Recession Affect Holiday Spending?

Source: Consumer Confidence Survey, Nielsen

U.S. consumers plan to spend the same amount this year on holiday gifts as they did in 2019, despite the current economic recession, according to a survey by Nielsen for The Conference Board. Not surprisingly, respondents say they’ll spend more on toys and games, as they look for ways to stay entertained under stay-at-home orders

The retail industry is preparing for pandemic-related changes to shopping behaviors, such as a longer holiday shopping season, increased e-commerce and reliance on shipping, and a drop in in-store holiday traffic. In fact, predictions indicate that online shopping will grow by 25% to 35% this holiday season.

The holiday season could help boost the economy in the final months of 2020, as retail accounts for 68% of GDP. Even though the country is struggling with low consumer confidence and high unemployment rates, shoppers are expected to spend $673 — just under the $675 household spending average from 2019.

Teens’ Mental Health During COVID-19 Is Slightly Better Than in 2018

Source: Monitoring the Future; Teens in Quarantine; Institute for Family Studies/Wheatley Institute

Seventeen percent of teenagers in America felt depressed while they were in school during the COVID-19 pandemic, compared to 27% of teens in 2018. In contrast, “U.S. adults in spring 2020 were three times more likely to experience mental distress, anxiety or depression than adults in 2018 or 2019,” according to a report by the Wheatley Institute.

Depression and loneliness were lower among teens in 2020 than in 2018, yet unhappiness and dissatisfaction with life were slightly higher. During the pandemic, teens were sleeping more and spending more time with their families, which helped lower all-time-high depression rates. However, financial distress still weighed heavily on teens. Out of 1,523 U.S. teens surveyed, one in four were worried that their parents couldn’t provide enough food for the family this summer. 

Mental health was already affecting teens pre-pandemic at record-high rates. The potential for new lockdowns, continued remote learning and uncertainty about the pandemic’s impact will most likely increase teens’ risk of long-term mental health issues. The CDC released a parental resource kit to help support parents in recognizing these mental challenges and ensure their child’s well-being.

For optimal delivery, please select your region:
Please enter a valid email address.
Success! Thank you for signing up.