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January 29, 2021

How Covid is driving technology into an economic ‘super-cycle’

By Paul Dennis

29 January

Sonal Varma, an economist, re-tweeted a discussion on why Asian economies could be the outperformers in 2021, given the potential for vaccine deployment and re-opening of the global economy. According to the International Monetary Fund (IMF) projections, China is expected to overtake the US GDP only in 2030. However, post pandemic, China seems to be climbing to the top spot on the global GDP as early as in 2028.

Sonal Varma further added that although all countries were going to witness better growth rates, the pace of recovery would diverge between the regions. Consequently, China has been the first in, first out and the leader of the pack.

In her views, two factors are driving this divergence; the first being the resilience against Covid and the subsequent rollout of vaccination programmes, and the second being the exposure to the largest sector that has been resilient through 2020, that is, the technology sector.

She states that the technology sector is in a super-cycle which will not only continue because of the increasing demand arising from trends such as remote working, smartphone usage, and server demand, but also due to the demand coming from significant areas such as 5G, AI, and others.

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