Be it a terrorist attack, Influenza of 2008, or this deadly Coronavirus – every economic shock leaves a legacy to trace back for years, maybe forever.
“The great depression of 1929-1941 changed consumer behavior for decades; Hyperinflation in the Weimar Republic is still haunting the German policy. And, The Asia financial crisis left people in the state of hoarding the world’s foreign exchange. Even the 2008 global financial crisis drove a wedge across many (mature) democracies that are still reverberating, with workers having measly pay gains since a decade.”
This time, COVID-19 caused a public health emergency that started shaking up the world economy in just a few weeks, people in affected areas started wearing masks, using hand-washes and sanitizers, stocking up on essentials, scrapping local and international travel plans, canceling social and formal gatherings, and remote-working. Even countries with fewer cases are also taking such measures.
What do you think, will the demand for brick-and-mortar businesses and local retailers remain the same long after the virus lockdowns ease? Obviously the demand will take a break. On the supply side, international manufacturers are forced to rethink where to buy the raw material and where to produce their goods.
International universities stung by travel bans and now looking for ways to diversify their foreign student base. Whereas, schools are forced to think for a digital alternative to keep educating during the closure.
In the world of white-collar, workplaces have shifted to teleworking, welcoming a new era of work-from-home, which is increasing the people’s regular schedule.
Food and beverage industry facing dine-out bans, many have closed temporarily, while a bunch of facilitating deliveries across close areas; janitors, grocery store clerks, and servers may demand higher pay and better working conditions in the post-coronavirus.
The tourism sector is in the most drastic hit – right from air flights to hotels, cruises, and the web of dependable businesses, all are struggling; tourists will resume their urge of exploring the world but it may take some time.
The health industry is in great shortages, doctors are not enough, ventilators turned out to be limited, govt. Funds are in great demand to disinfect the local areas, especially hospitals, airports, paper currency, etc. Once the deadly Corona rests, more attention and resources will be needed to avoid the spread of any other epidemics.
Some analysts expect that the rush to online everything will lead to a condition of winner-take-all markets: Small to medium-sized ventures, especially those handling local neighborhoods could suffer the most as larger companies are already consolidating power over the digital world.
The virus has led the economic policies on a dime and forced the economic outlook to look for newly-created priorities – State banks are in emergency mode, governments are offering incentives to prop up struggling sectors, hygiene is becoming the corporate’s top agenda, commuting patterns changed, boarders are in tight control, and whatnot.
These changes are just the expectations of the world’ economists that will endure long after the virus; the businesses need years to get back to normal after the virus is contained. Since, no two economic shocks are the same, so it’s far from certain what changes COVID-19 will leave on the global economy.
Does anyone remember the oil supply shock back in the 70s that caused the extensive measures in energy conservations?
So, according to Fabrizio Pagani, a former adviser to Italy PM draws this former shock and explains how the current financial crises derive the demand shock for a new, radical regulatory framework across the financial sectors, especially banking.
This time, he is expecting a great change in almost everything that is affected right from distance learning to online schooling, industrial outlook, all the business models will be reworked.
The world’s economy is already at stake due to the US China trade war and Brexit, and now the COVID-19 – now, the world’s manufacturing supply chains will definitely be reshaped after the virus will be contained.
So resultantly, the pandemic will destroy small businesses due to the warnings against in-person interactions. But will boost almost anything that is and can be done online or anything with a minimal human contact like online learning, grocery deliveries, takeout eateries, streaming videos, even real estate can be replaced with online notaries.
According to economists, there are likely dramatic losses for local retail and dining restaurants, thousands of jobs disappearing as those companies — especially those that do most of their business online — will be able to extend their potential. The demand for teleworking, online classes, and streaming videos will increase sharply, while schools, movie theaters, and physical workplaces will close their doors.