This crisis is unprecedented, exceptional and unique. It’s had a major impact on the world’s economies and markets. At present over 2.245 million people are infected by the Covid-19 virus, about 152,707 lives have been lost, and countless more are losing their jobs, while many more face crippling debt and further uncertainty over their homes and businesses.
More than one-quarter of the world’s 7.8 billion inhabitants are now largely confined to their homes. Our world has turned upside down and it’s really tough for many to stay optimistic and maintain sanity. This virus seems like an impossible barrier to overcome. It has brought unbearable pressure and frustration to governments, businesses, employees and families. There is enormous uncertainty.
It has brought out different emotions in people, anxiety for some, anger, depression, denial for others. Careers derailed, finances shattered. For many it’s hard to imagine a future. There will be more polarisation in society.
There was overconfidence at the start of the crisis. We’ve seen leaders around the world stepping up, providing vision, motivation during this crisis. Some leaders were transparent, communicated clearly and concisely. Some struggled to step up.
The US initially shrugged it off as another flu, that it will not be a major disruption and if it was they were prepared to manage it. Some governments played it down as an Asian virus, confident Europe or elsewhere would not be affected. This virus isn’t prejudice, it infects everyone regardless of race, nationality, or social status.
One would expect that after experiencing SARS and MERS, governments would plan well for a pandemic, that there would have been a coordinated effort worldwide. The USA wasn’t prepared, nor was Italy, France, UK etc. It’s debatable if the WHO took too long to declare the outbreak a global pandemic or if it failed to coordinate a coherent international response.
Asian countries especially South Korea, Taiwan, HK, Vietnam etc. were proactive, acted swiftly. They applied containment measures, along with a strong health and public services to trace, track, test, isolate, that helped curb spreading, keep the number of deaths down.
Clearly priorities of some governments must be redefined. They need to be prepared, respond decisively and swiftly. They must prioritise social protection and health security to the same level as other threats such as war and terrorism. The recovery may last much longer. The downturn may be worse than the 2008 financial crisis. A global recession is imminent. Some economists say it will be worse than the great depression.
How deep is the economic damage and how long will it last? Will unemployment soar to a record high? Business uncertainty, anxiety about the future is deepening. Will businesses take a cautious approach towards new investments, one much longer than usual? Will FDI’s be reduced? What will be the impact for emerging markets like those on the African continent?
Do countries have an exit strategy to resuscitate their choked economies once lockdowns are lifted? Do they have a comprehensive action plan for economic recovery after this crisis? This crisis has clearly shown us that it’s crucial that budgets must be in place to deal with complex crises such as this.
It’s important that food supply chains are kept open by maintaining free trade, avoiding food export bans and treating farmers as assets. There are spiralling repercussions of the devastating economic impact to communities, organisations, business, individuals and families. We can’t underplay the scale of this recovery nor the need to rebuild and make a change for the better. Many questions but so few answers.
“The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.”
– Albert Einstein
One key question is – do we plan for business as usual or new normal? For businesses, priority now is surviving the crisis. But they should also formulate plans post crisis, reshape strategy, not just tweak current models but formulate new operational models, build in shock absorbers centred on resilience, centred on the fact that the worst is yet to be. Risk management and succession planning must take centre stage.
Restrictions to movement may happen in limited forms in the weeks or months ahead as countries lift their lockdowns. However this crisis will most likely change the way we live, work and play in the future. Even the way we worship could be redefined. It will pave the way for some truly exceptional ideas and innovation in many sectors, e.g aquaponics to vertical garden farming for self-sufficiency, biotech, cell base meat, etc.
The crisis has turned technology cynics into believers, especially the elderly who have embraced it as their window to the world. Zoom, Google Classroom are some of the new buzzwords. Because technology has kept us connected during this crisis, tech firms post crisis will certainly gain ground and be a dominant force.
For businesses, digitisation is the future. Companies would invest more in data analytics, machine learning, bots, etc. A future where machines will be able to predict a change using real-time data to help companies make changes accordingly may be closer than we think.
The outbreak has accelerated the application of new technologies. Digital technology, block chain technology, social communication, big data, workplace innovation and automaton will be more prominent. More people will turn to telemedicine, virtual care, and home test kits for flu, cholesterol, etc. Working remotely, a flexible workforce and prioritising employee wellbeing and engagement could be the new normal.
The coronavirus has forced offline-driven businesses to shift online, especially in education, entertainment, and retail, this trend will continue long after the pandemic is over. E-commerce, already prominent, will shape consumer spending behaviour further, online shopping will see a surge. Automaton will further minimise human contact.
Lectures, meetings and conferences may be held virtually. Hand washing may become second nature. People will still go out but more people may socialise virtually than physically. Wearing a mask when having a common flu may be a law.
Businesses and institutions need to take this opportunity to reconfigure, reshape and drive transformation via capability building and new value creation. Some will face bankruptcy, some will find untapped opportunities, innovate and rise to the top.
People are learning what’s essential, what’s not. They are starting to reassess their priorities. Since the crisis, families have spent more time together. Some have even discovered home cooking skills, enjoyed lunch and dinners at the dining table together.
The unsung heroes. Garbage collectors, cleaners and gardeners who go the extra mile to keep our neighbourhood clean, food delivery people who make sure we have food while confined at home, are finally receiving the appreciation they deserve. Doctors, nurses, orderly’s, etc, risking their own health at the front line are now receiving a measure of gratitude. We must recognise these professionals as critical to our national security. It’s time to translate this appreciation into monetary form with better pay, working conditions, perks, etc.
Governments and stakeholders must identify and address systemic points of failure in their response to Covid-19. This should lead to positive changes in our approach to public health and emergency response and containment management. Healthcare system across many countries was underfunded, understaffed, unprepared for the Covid-19. Response was slow and uncoordinated. Post crisis primary healthcare must be scaled up along with infrastructure for emergency medicine staffed with trained medical staff to handle pandemics.
We are transitioning to a new world, where consumer behaviour will drastically change. There will be shifts in consumer demands across various sectors. There may be huge pent-up demand and businesses will want to ramp up to meet it. On the other hand consumer spending may be curtailed, especially those who lost a big chunk of their earnings and or savings in 2020. Because social distancing maybe here for a while more marketers will have to come up with new innovative ways of engaging consumers. Live streaming will continue to play a bigger role in engaging consumers and selling products.
People will become more health conscious than ever, more emphasis on maintaining a healthy body and mind. There will be a massive rethink in the way we approach food with people being concerned of where the food comes from, how it’s grown and where it’s prepared. There is an opportunity for companies to focus beyond immune health products.
Expect people’s eating habits to change too as more will eat in than dine at restaurants, which in turn will change the food retail landscape. Sales of healthier food such as organic food and vegetables, fruits, plant-based meat, cell-based meat, etc, will surge. Demand for orange juice has increased since the onset of the coronavirus. This is likely to continue post crisis as people continue to purchase health boosting products. This demand will be good for orange growers worldwide.
Supply chains will take some time to recover as existing suppliers and service providers such as freight forwarders may have downsized or shut due to bankruptcy. Some due to scarcity of raw materials or overwhelming demand would take time to ramp up production. There will be mergers and acquisitions within this industry and others. Businesses will be impacted by shortages as labour mobility will also be affected due to border restrictions.
Countries will certainly push for supply chain reliance, source closer to market, produce and buy local over purchasing global products and services. There will be emphasis on the importance of local production and agriculture to ensure food security. Expect downstream and upstream investments closer to markets. More governments may enact protectionist measures to support local industries.
Companies are diversifying their procurement other than China. Japan has earmarked US$2.2 billion to help its manufacturers shift production out of China , as the coronavirus disrupts supply chains between both countries. Google and Microsoft are accelerating their efforts to shift production of hardware to other parts of Asia. Many of these companies had already started doing this during the US-China trade war but now will accelerate their plans. This will in turn boost the Asian economies of Vietnam, Thailand, and Indonesia, as well as countries on the African continent where labour is cost effective.
Big Brother Is Watching You. The global damages by some estimates are in the tens of trillions of dollars. In Denmark, the government is paying up to 90 percent of employees’ salaries to keep businesses afloat and ensure that people have jobs when the pandemic ends. In the United Kingdom, the government will cover up to 80 percent of workers’ wages. These packages are mainly to support basic needs of citizens, preserving jobs, and helping businesses.
With billions spent by governments in stimulus packages, post crisis, these governments will likely increase taxes along with increased business scrutiny, this in turn could impact growth during a period when their economies are already shaky.
Moving forward there will be greater government intervention into various sectors. Credit cost, insurance premiums and business cost will increase. This in turn will affect the relationship between government and private sector, society in general.
Government would use digital technology, especially surveillance more openly like the tracking app used now to track people’s movement and clusters. Necessary as it may be now, it will however pose as an invasion of privacy and freedom. Privacy and individual rights will be questionable. Some countries would take this opportunity to tighten their grip on the masses.
We look forward to a day when lockdowns are lifted, when social distancing and stay-at-home mandates are a thing of the past, beers at the pub with friends, and the curve has flattened to zero new cases and deaths. However it cannot be completely back to normal, or business as usual because that was what got us into this crisis in the first place.
Whichever way you look at it, change is inevitable, some good some bad. Some difficult, many necessary. One thing is for sure, a new normal will be upon us. We do need to look ahead to the recovery from coronavirus. The sooner we plan for recovery, the better it may go.