[Opinion] Why 2020 Is Important

Professor Seoyonggu, Department of Business Administration, Sookmyung Women's University

This year is already rushing toward its midpoint. Since the beginning of 2020, the world has suffered from the pandemic of the novel coronavirus infection (COVID-19), and fundamental changes have begun in politics, economy, society, and culture, leading some to interpret that the true 21st century starts this year. There are numerous predictions that the world will be completely different before corona (Before Corona·BC) and after corona (After Corona·AC). Amid many forecasts that 2020 will be a historic turning point, the recent cover story of the British current affairs weekly The Economist on the "90 Percent Economy" cannot be overlooked.

The 90 Percent Economy refers to the projection that two years after the complete end of the COVID-19 crisis (assumed), the world will not recover to 100% of its previous economic capacity but will shift to a truncated 90% economy. If our future transforms into a 90 Percent Economy, it can be assumed that the number of jobs, consumption, and production will decrease by 10% or more. The policies and decisions we make in 2020 will determine whether the Korean economy can recover its 100% potential from before COVID-19 or not. The reasons why 2020 is important are as follows.

First, 2020 is expected to be the first year in modern Korean history when the total population decreases. Since the end of last year, the number of deaths has exceeded the number of births, causing a population decline phenomenon, meaning that the Korean market is entering an era of demographic disaster. Population decline was already a gray rhino economic risk that had been anticipated, but the problem is that its speed is progressing more steeply than expected. Population size represents national power, purchasing power, and an indicator of future growth potential. Since this year’s economic growth rate is also expected to record a negative figure for the first time in 23 years since the International Monetary Fund (IMF) economic crisis, urgent development of policies and strategies to overcome the 90 Percent Economy era is needed.

Second, 2020 is expected to be the year when non-face-to-face (untact) becomes mainstream. The recent rapid growth of Kakao’s stock price, making it the 8th largest company by market capitalization, symbolically shows this. Considering the recent reality of consumers who must wear masks and seek non-face-to-face channels, technology companies such as Naver, Kakao, Netflix, Google, Coupang, Amazon, and Apple, which focus on non-face-to-face services, have now become the mainstream of society. A survey result is shocking: while 80% of Korean baby boomers in their 50s and 60s prefer face-to-face service at fast-food restaurants like McDonald’s, only 20% of those in their 20s and 30s prefer it. Offline traditional companies and merchants must think about how to convert existing services to non-face-to-face and develop differentiated services from untact companies.

Third, 2020 is expected to be the first year of deglobalization. Four years ago, with Trump’s election as U.S. president and the full-scale Brexit (the United Kingdom’s withdrawal from the European Union), deglobalization, which started in the capitalist headquarters of the UK and the U.S., has spread worldwide due to the COVID-19 crisis. As global supply chains are hit and protectionism spreads, a shadow is cast over the Korean economy, which relies on exports. Deglobalization acts as a major cause of the 90 Percent Economy. To overcome this, breakthroughs must be found in services. Overseas demand should be sought in medical care, education, and digital content markets.

There is a saying, "Ilgak yeo samchu (一刻如三秋)," meaning "a moment feels like three autumns." The desire for the end of COVID-19 is so desperate that a day feels like a year. However, considering that what awaits us after COVID-19 ends is the 90 Percent Economy, our responses and decisions in 2020 are even more important.

This content was produced with the assistance of AI translation services.