Coronavirus lands an uppercut. Can business recover from a knockdown?
Our planet reminds us of a punching bag for the last several months. COVID-19 lands severe blows worldwide. Tens of thousands of reported infection cases; thousands of deaths, caused by the coronavirus; national boundaries lockdowns; drastic quarantine measures; lack of medical supplies and personnel have become a terrifying routine of daily reports.
But behind all these horrible figures and events a ghost of global economic recession and crisis flies its flags. And in spite of the fact that a vague hope to win COVID-19 is dimly visible, there are a lot of problems waiting at the front door to deal with.
Coronavirus social effects. A painful injection in overconfidence
In its early stages, COVID-19 looked nothing like a crisis. Even though several scientists had been warning of the potential for a catastrophe for weeks, the initial emergency declarations were met by skepticism by both the public and many policymakers. They assured that neither people nor economies should panic and stop because of the virus.
The COVID-19 crisis could change this in two ways. First, it has already forced people back to accepting that expertise matters. It was easy to sneer at experts until a pandemic arrived. Second, it may return humankind to a new seriousness. We are more fragile than we thought!
This loss of innocence, or complacency, is a new way of our existence that we can expect to change our interaction with the world. We know now that touching things, being with other people and breathing the air in an enclosed space can be risky.
How quickly does that awareness recede? It depends on people, for sure. But it can never vanish completely for anyone who will live through this year. It can become second nature to avoid shaking hands or touching our faces. And we may all find we can’t stop washing our hands. The comfort of being in the presence of others may be replaced by a greater comfort with absence, especially with those we don’t know intimately.
In any case, coronavirus pandemic made certain things obvious:
- The “superpower” title isn’t secure from the disease.
- Europeans are not so well-educated as it seemed.
- People can do well enough without traveling abroad and successfully find what to occupy themselves with.
- Affluent people are not less susceptible to the virus than the poor ones.
- Billions of dollars can be spent on people without bureaucratic impediments.
- Medical personnel is worth more than football or hockey players.
- Oil is useless in society without consumption.
- People understood how animals feel in zoos.
- The planet is recovering quickly without human interference.
- The majority of people can work from home.
- It is not difficult to follow the rules of hygiene and wash hands.
- The world is full of GOOD people.
Meanwhile, overconfidence and negligence in some cases cost a lot. Catastrophic situation in Spain and Italy is a vivid example. But the justifiable concern about getting infected is having an impact on social structure and sense of mutual responsibility.
Though some country leaders underestimate COVID-19 danger, deny the necessity of borders closure and the existence of virus itself, common sense wins in the majority of cases. Politicians, celebrities and ordinary people try to overcome the hardships of pandemic together, learn to hear one another and become more attentive to the needs of others.
Coronavirus economic effects. How to foresee the uncertainty?
The ongoing spread of COVID-19 has become one of the biggest threats to the global economy and financial markets. Fears of the coronavirus impact on the global economy have rocked markets worldwide, plunging stock prices and bond yields.
The Organisation for Economic Cooperation and Development (OECD) in its March report downgraded the economic growth forecast in 2020.
Fig 1. Global economic growth slowdown. Source: OECD (March 2020).
But the major downside of the attempts to foresee the global economic recession scale is that nothing like the COVID-19 pandemic has happened before. Business analysts can take into consideration the current situation and compare it with the crisis in 2008. But coronavirus leaves too many variables in the equation to find a definite answer. Even if coronavirus resurgence is left behind brackets.
With so many unknowns surrounding the trajectory of the epidemic, and the response from government and business, forecasters cannot aspire to precision. Now, experts can only accurately count losses and state certain downfalls, such as:
- Health care crisis that turns medical care challenge into an economic one. Health-care workers are on the front lines of the fight with coronavirus. They could become infected and need to self-quarantine. The health and safety of the population remain the highest policy priority. Governments and politicians need to make sure that sufficient diagnostic, protective and therapeutic equipment is available.
- The demand side of the economy is primarily hurt. As businesses shutter their operations, people can no longer go to work and often lose their jobs and incomes. Their demands shrink as well. Small and medium businesses, especially in low-margin industries such as restaurants, will be among the ones most acutely hit by the economic fallout.
- High uncertainty over the economy reins that makes economic fallout deeper. Businesses are pulling back, not just because they have no customers, but also because they don’t know how bad the situation may become. Families are cutting spending because they are worried about drastic drops in their incomes.
- States and local governments have to deal with the fallout from the pandemic. Many people will have to quickly rely on public services. And, local businesses such as restaurants, hotels, and event venues are shuttered for the time being, reducing employment, jobs and tax revenues.
- The problem of massive economic inequality. Generally, lower-wage workers with less education and rural households have fewer economic resources – incomes and wealth – than higher-income workers. Survival and recovery of the former ones are much more questionable.
Focusing on the stock market is not the best solution. Investors have oscillated from panic to euphoria and back to panic. And the stock market has gone through massive gyrations over the past few weeks. But boosting the stock market will do little to ordinary people’s current and future financial health.
Coronavirus disease. The only vaccine is a gradual recovery
The coronavirus now appears to be infecting economies as quickly as it does people. And like any infected person, any “infected” economy needs imminent treatment. To avoid emergency surgery after the pandemic end, gradual recovery steps should be taken now. The realities of new, after-coronavirus normal fully depend on what is done today.
Among the industries seeing the greatest impact from the fallout are hospitality, travel, education, media, and entertainment. Meanwhile, production firms in agriculture, factories, mines, and utilities reported some uptick in revenues.
Nevertheless, business leaders across the board said they’re taking new measures to curb the impact of the virus. That includes:
- Focusing on facts.
- Communicating more regularly with employees and stakeholders.
- Adopting new health and safety procedures.
- Stabilization of supply chains.
- Making short-term and long-term plans.
- Canceling major events.
- Halting business travels.
But how to lead a business from the disastrous COVID-19 crisis to the new normal? A company should cross five horizons to beat coronavirus pandemic post-effects. According to McKinsey, they are Resolve, Resilience, Return, Reimagination, and Reform.
Fig 2. Five steps to the new normal.
The coronavirus outbreak is undoubtedly a story of human tragedy. But it will cause significant harm to the economy, too – and the true scale of this cost has only just started to emerge.
In spite of the fact that some experts predict that coronavirus can become endemic and its recurrence will cost many lives every year, let’s hope for the best.
Finally, we begin to understand that affluence and power do not shield from diseases and viruses. And only consolidated efforts of governments, businesses, and ordinary people can stop global disasters.
COVID-19 pandemic became the chemical catalyst, which has pushed the human mind and way of life alteration. And it very much depends on a person, what changes there will be.
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