The Great Lockdown – Life After the Pandemic

The Coronavirus continues to spread across the globe, bringing with it fear and uncertainty, as well as high and rising human costs. With almost 2.7 million confirmed cases as at Thursday, 23^rd April, the impact of the pandemic on economic activities has started to take its toll.

The extent of the devastation in terms of human lives and on the global economy cannot yet be ascertained with certainty because a lot is still dependent on how long governments around the world are able to sustain the restrictions on social and economic activities, how the virus evolves over time, how long it takes for scientists to develop a vaccine, etc.

However, the International Monetary Fund (IMF) has predicted that the world would likely face its worst financial crisis since the Great Depression – the Great Depression began with the stock market crash of 1929, about a 11 years after the world last faced a global pandemic of this nature, and lasted for over a decade. The IMF economic outlook forecasts the global economy to contrast by -3 percent in 2020, in a base scenario which assumes that the Coronavirus pandemic fades in the second half of 2020.

The responses of various governments around the world have brought economic and social activities to a standstill. As we emerge from the crisis, whenever that may be, what are some of the areas in which the Coronavirus would make a lasting impact?

Geopolitical tension and nationalization

Before the Coronavirus pandemic, we had, in recent years, started to see the rise of nationalism and populist governments amongst some of the world’s leading democracies – we had “Brexit” in Britain / the EU, Donald Trump’s “Make America Great Again” / “Keep America Great” in the US, anti-democratic “Judicial Reforms” by the right-winged ruling party in Poland, to mention a few.

A number of countries had also been dealing with economic consequences from trade tensions between the US and China, and between the US and anyone who was not in Donald Trump’s good books, leading many to predict that the catalyst for the much-awaited economic downturn or slow-down in the business cycle would be a “presidential tantrum”.

Now, with the Coronavirus spreading economic and human costs around the world, there have been suggestions from politicians and media to have China pay for the economic damages suffered by their respective countries. The rationale for most of these suggestions have ranged from conspiracy theories about how the virus was created by the Chinese government to destabilize the world order, to how China’s initial denial and attempts to shut down / suppress information about a viral outbreak in one of its cities is the reason the virus was not detected sooner.

To slowdown the spread of the virus, most countries around the world have now issued travel bans in-and-out of some or all countries that are affected by the Coronavirus. The lockdowns and travel bans have, as at today, threatened one of the core fundamentals of the European Union – free movement of goods, services and people.

In addition to already existing travel bans, the US president, Donald Trump, has taken the opportunity to pursue an immigration ban for an initial period of 60 days. His administration has defended the immigration ban, stating that it’s purpose is to help put unemployed Americans first in line for jobs when the economy reopens.

When the virus is finally contained, we are likely to find many countries redefining their relationships and diplomatic ties. Restrictions will finally be lifted for most countries but we are also likely to see more countries remain on travel bans in the pretense of the Coronavirus not being fully contained in these countries.

In the economic fallout and increase in unemployment that will result from the crisis, right-winged politicians will likely take advantage to further their cause. Nationalism and populist rhetoric will likely be on the rise across Europe, Asia and in America.

Supply chain diversification

On February 7^th, when the Coronavirus outbreak was still confined to China, with limited cases in a handful of other countries, I wrote a tweet about how factories in Europe were getting shutdown as a result of a disease that only affected one country, China.

I stated that this was a major concentration risk and that business leaders and CEOs would need to seek supply-chain diversification across geographic locations, to limit exposure to any single country in the future.

Now that the virus has spread to other countries, wiping out employment in entire industries, in addition to seeking geographic diversification, many organizations are likely to seek to consolidate their supply chains nearer to home. Government incentives (including tax breaks) to boost employment, and the rise in populist policies are likely to nudge otherwise reluctant business leaders in this direction.

Innovation and the rise of AI

One of the most popular phrases this year has been “never let a good crisis go to waste”, and history has shown us that some of the world’s leading discoveries – ranging from Isaac Newton’s major insights in calculus, analytical geometry and discoveries about gravity, as well as the more recent rise of the gig-economy and upspring in the start-up culture - can be attributed to periods in which there were economic or healthcare crisis and disruption in daily activities.

A less physical world will emerge from the Great Lockdown as more people become more receptive of contactless services and working environments. New and existing technologies will be deployed to help people navigate their daily routines without having to show up physically – virtual working culture, food delivery, virtual learning, augmented reality in business, manufacturing and in leisure / hospitality, etc.

As more organizations move production / supply chains closer to home, where labour is often more expensive, there will likely be an increase in automation and the use of AI to replace repetitive and redundant tasks.

Changing consumer behavior

A lockdown that has lasted for over a month in some places and is likely to go on for longer in other places has forced consumers to change or modify their preferences. A lot of people have been restricted to food (indoor dining), shelter and online entertainment.

An entire generation of adults who had never lived through war times or periods of extended lockdowns are learning to deal with a new way of life, and services or activities that were previously considered essential or compulsory for their comfort have been rendered luxurious.

When the world finally conquers the Coronavirus, will things ever go back to the way they were?