What If? A Global Recession Lands as You Do
When it pays to look and act beyond the headlines. Spot what’s shifting globally to make smarter, faster decisions.
You land in a new fast-moving city. The airport Wi-Fi connects. Your phone lights up.
A global recession has just been confirmed.
In this scenario-led edition of Crossing Borders, we explore a moment that could plausibly arise in 2025.
The cause? A double shock: rising tariffs and war in the Middle East. As Stephen S. Roach, the former chair of Morgan Stanley Asia, noted in Project Syndicate on 24 June 2025:
“The possibility of a double-shock combination only increases the odds of global recession; in forecasting circles, it’s as close to a smoking gun as you can get.”
You’re in a new city to do business internationally. How do you respond?
Here are two paths leaders often take: one is a familiar default, the other is shaped by deliberate design.
The value of considering scenarios like these is to explore alternative responses and shift focus from what history shows most will do.
Option 1: Stay With the Familiar
Your itinerary stands. The official meetings take place. Photos are taken and shared on social media. However, the mood has changed. Most of your time is now spent in the hotel, on Zoom with HQ. The focus is on how to adjust, reduce, and preserve.
It’s a common response, explained by:
Familiarity bias. Status quo bias. The mere exposure effect.
These well-documented cognitive tendencies often arise at times of uncertainty. They prompt us to lean into what we know.
Familiarity bias leads us to favour the known over the new. In business, this shows up as a reliance on established markets, trusted partners, and habitual strategies, even when signs suggest fresh thinking is needed.
Status quo bias reinforces inertia. It’s the pull to maintain course, albeit not necessarily because it’s optimal, however because change feels risky. During economic shocks, this bias can stall adaptation and reinforce internal focus.
The mere exposure effect, first described by psychologist Robert Zajonc, explains our preference for what we encounter often. In organisations, it can result in clinging to outdated systems or relationships, albeit not for their performance, but rather for their familiarity.
Individually, these reactions reflect a natural instinct to protect what’s already working or what we currently do. Yet at an organisational level, they can compound, creating a culture that’s cautious, inward-facing, and slow to recognise what’s emerging.
And, that comes with a cost:
Local signals missed.
Decisions recentralised.
Global shifts filtered through a narrow lens.
Retreating may feel safe. However, history shows otherwise: in downturns, those who pause entirely are often outpaced by those who stay moving.
Option 2: Get Out to Explore and Expand
You maintain your in-market focus, checking in with HQ, but not retreating to it. The market you’re visiting isn’t in the headlines, however it is growing, as a result of demographic and technology-enabled economic shifts. You adjust your agenda to meet local ecosystem leaders, explore incubators, and listen in on what’s emerging.
You meet entrepreneurs creating high-impact solutions with limited resources, designing models that lift people up the economic pyramid. You gain insight into how remittances, mobile payments, and informal networks are driving innovation, reshaping access, and accelerating outcomes in ways not yet visible from afar.
And you bring it back to HQ.
Your team (and important stakehodlers) gains first-hand insights on:
Signals beyond the obvious.
Models tested under constraint.
An updated view on what’s possible.
This is what transformational and situational leaders do. They read the room, assessing context, conditions, and cues. Then, they stretch out the map to account for what standard plans might miss.
Transformational leadership involves articulating a compelling vision, motivating others to exceed expectations, and adapting strategies to seize emerging opportunities. Studies have shown transformational leaders increase team innovation, improve adaptability during crises, and are more likely to navigate economic shocks with confidence and cohesion (Bass & Avolio, 1994; McKinsey, 2023).
Situational leadership, originally developed by Hersey and Blanchard, recognises there is no single best way to lead. Effective leaders adjust their style, directing, coaching, supporting, or delegating, based on the readiness of the team and the complexity of the situation. In dynamic or unfamiliar markets, this agility is critical.
In periods of global contraction or volatility, leaders with these traits are better positioned to:
Act on directional, not perfect, data.
Adapt without paralysis.
Spot and pursue new demand, even in unfamiliar markets.
Rather than defaulting to preservation, they remain alert to possibility. The data shows they tend to outperform peers in post-crisis recovery by investing earlier, entering new markets during downturns, and reallocating capital with greater speed (BCG, 2019).
These leaders don’t wait for calm. They explore and build what’s next.
What Drives This Divergence?
Global recessions tend to reveal two different responses.
Legacy firms often recalibrate. Hiring slows, initiatives pause, and attention turns inward to cost control and alignment. During the 2008 Global Financial Crisis (GFC), sectors such as banking, real estate, and manufacturing were among the hardest hit.
Meanwhile, globally curious, intangible-led, and tech-enabled companies move. They respond to unmet needs, rethink their business models, and move toward markets others overlook. Following the GFC this mindset helped shape the rise of several market-leading companies including:
Xero (New Zealand): Founded in 2006, Xero offered cloud-based accounting software to small businesses needing affordable, remote-ready tools. By 2008, it had expanded into the UK and Australia, leveraging simplicity and early global reach.
Atlassian (Australia): During the downturn, Atlassian launched starter licences, acquired GreenHopper, and ran its largest hiring campaign. It invested in product-led growth while others downsized.
Shopify (Canada): Shopify helped small retailers shift online when physical storefronts struggled. Its cloud-native platform scaled quickly, becoming a backbone for global e-commerce.
Zoho (India): In 2008, Zoho launched Zoho Invoice and added core productivity tools. With heavy R&D investment and a focus on price-sensitive businesses, it surpassed one million users that same year.
Each advanced during constraint. They did not wait, rather they built around what was shifting.
2025 Patterns
In 2025, a similar pattern is emerging.
Legacy sectors like manufacturing, commercial real estate, and traditional retail continue to navigate a number of pressures: workforce imbalances, tariff uncertainty, elevated capital costs, and structural inertia.
Despite ongoing challenges, some legacy sectors, such as manufacturing, are beginning to show signs of stabilisation and adaptation. Continued investment in digital transformation, supply chain resilience, and workforce development is helping these industries manage cost pressures and shifting market demands, offering cautious grounds for optimism.
Yet these incremental gains can reinforce existing models, making deeper shifts less likely, even when larger, longer-term gains may lie elsewhere.
At the same time, a rising cohort of globally attuned companies and entrepreneurs, including those in digital infrastructure, fintech, and AI, are doing business differently. They’re entering new markets, attracting talent, and building business models for a reshaped world.
According to the IMF’s April 2025 World Economic Outlook, economic growth projections vary markedly across countries. See the full country-level breakdown here.
There’s No One Right Move. Yet There Will Be Winners.
There’s no universal playbook for what to do when a global recession hits, whether you’ve just landed in a new city or are watching it unfold from home.
In some organisations, stakeholder expectations demand caution. Internal teams may need reassurance, not expansion. In others, the strategic value lies in uncovering something new. Either way, the pressures of crisis often push us towards conformity and doing what feels safe, expected, and explainable.
And, it’s okay to go your own way.
That might be Option 1, Option 2, or a strategic combination of both. We can imagine a world of leaders choosing differently.
History shows that the leaders who cross borders, break down barriers, and achieve commercial success in the years ahead are those who leverage global shifts - whether promising or problematic - to explore and expand.
In his recent article, Stephen S. Roach also wrote:
“Unlike a recession in an individual economy, which generally reflects a contraction of real output, one at the global level typically involves about half the world’s economies contracting while the remainder continue to expand.”
If the headline of a global recession lands, it won’t mean that all markets, sectors, or business models will contract.
Nor must we.
It pays to see where in the world growth accelerates, beyond our known markets and industries.
Because when we see more, we can move smarter.
If a global recession hits your established markets, where in the world would you explore and expand?
Would you be one of the few, while your peers and competitors double down on what they already know and do, or would you be in good company?
Further Reading:
The Crisis and the New Entrant
During the Great Depression, Revlon introduced the world’s first pigment-based red nail polish, Cherries in the Snow. It was a small luxury in a time of financial hardship and provided an affordable indulgence when larger luxuries were out of reach. This product helped Revlon evolve from a drugstore supplier to a global cosmetics brand.
Downturns have often sparked innovation. While established players consolidate, new entrants emerge. They spot gaps, respond to shifting consumer behaviours, and move quickly. These are not anomalies. They are patterns.
Breaking Out of the Small Pond
Some leaders are happy being a big fish in a small pond. Others yearn for a bigger ocean to swim in.
There’s a group of established and emerging leaders who see beyond their immediate horizons. They want to take what works in their domestic market or region and expand it globally. What’s their mission? To earn foreign revenue, diversify markets, de-risk their business model, and amplify their impact on a global scale.
Yet bigger oceans aren’t without their threats. Larger competitors exist, and while bigger opportunities await, so do bigger challenges.
Mend The Gap
It is a challenging time for many people across the globe. We see it in real-time. For those living away from crises, reactions vary: some voice their feelings on social media, while others choose silence. Each response is personal, and every choice, to act publicly or not, deserves respect.
Yet beyond our digital personas, we have the chance to form genuine connections with people. Whether it’s a simple email to say hello, a check-in text to see how someone is doing, a supportive message on LinkedIn, aiding an NGO in a crisis region, or reaching out to someone feeling the ripple effects of a distant crisis - every gesture counts.