Page 15 - Industrial Technology EXTRA - Brexit Briefing

GLOBAL OUTLOOK 2021

BUSINESSES COVID CASES IN EMERGING MARKEKTS (TO NOV 2020)

FIND NEW WAYS
TO INNOVATE IN

THE FACE OF THE
COVID CRISIS

The international outlook for R&D is
promising despite strong headwinds,
according to research by Ayming Group.
Ayming’s second annual International
Innovation Barometer (IIB) reveals that
R&D departments are being empowered
by the creation of innovation ecosystems,
new funding methods, and the
deployment of technology.
US CORE PCE INFLATION TO CROSS 2.5% MORE QUICKLY
R&D teams remain resolute in the face of
several key obstacles. Not only has
Covid-19 caused expectations for budget
increases to decline 12%, but complexity
is making it increasingly difficult to
innovate successfully, international
competition for talent is fierce, and
collaboration is proving challenging.

However, advances in technology are
empowering R&D professionals, who see
it as the most important driver of
innovation, selected by 39% of survey
respondents. All the same, the growing
technical nature of R&D means
businesses are looking for outside
support, with use of external private
resources up from 35 to 48%. Collab-
oration may be down, but a new back. Morgan Stanley projects that its
outsourcing hybrid model is emerging Emerging markets lead the rebound economy will expand 9% in 2021, before
whereby big companies create an Emerging markets, excluding China, have moderating toward 5.4% in 2022.
innovation ecosystem with smaller ones. faced numerous cyclical challenges in recent Nonetheless, every recession leaves its mark
years. Now, with more favorable Covid-19 and the Covid recession will, as well – with
The funding landscape has also dynamics in many developing nations, the return of inflation. “When it comes to
diversified. Incentives remain crucial, with emerging markets could set the pace for inflation, we see a very different dynamic
R&D tax credits most popular at 4%, but global growth. Ahya says: “Trade-dependent taking hold, especially in the US,” says Ahya,
applications remain overcomplicated – a economies, like Korea and Taiwan, are noting that the consensus hasn’t fully
particular problem for SMEs with limited already well into their recoveries, while in the embraced this concept.
resources. SMEs often cannot finance large, arguably more domestic demand-
R&D themselves, so these challenges oriented economies, like India and Brazil, a Put simply, the pandemic has caused an
have caused a jump in private funding, number of indicators have recently exceeded unemployment spike to levels not seen in
with equity/debt funding up 6%, and pre-COVID-19 levels and are registering generations, and policymakers are expected
crowdfunding up 17%. positive year-on-year growth.” to do whatever it takes to create jobs and
return employment to pre-Covid levels as
Mark Smith, partner of innovation Morgan Stanley economists expect this quickly as possible – even as economic
incentives at Ayming UK, says: “The pace momentum to continue into next year. At the output improves. Those stimulus policies will
of economic change is rapid, and same time, emerging markets should benefit eventually pressure wages upward, lifting
Covid-19 has added fuel to the fire. And, from widening US current account deficits, inflation. “These reflationary policies will also
while the impact of the pandemic on R&D low US real interest rates, a weaker dollar, have key implications for global growth, and
has yet to fully reveal itself, companies and accommodative macroeconomic especially for emerging markets, because of
must innovate through market policies. That adds up to 7.4% GDP growth a shift in the US savings-investment
downturns. Fortunately, this report reveals for emerging markets in 2021, led by a balance,” Ahya says. The economics team
that businesses and governments alike forecast 9.8% improvement in India. believes that this change in regime will in turn
are discovering new ways both to fund drive US dollar weakness and ultimately set
their innovation and make it more Meanwhile, China – which was the first to the scene for a reflationary impulse for the
productive.” impose Covid-19 closures – has quickly
regained ground, as consumption roars rest of the world.

INDUSTRIAL TECHNOLOGY EXTRA – WINTER 2021 15