CORONAVIRUS - GLOBAL PANDEMIC (PART II)

By Artur Smejlis

COVID-19 ensnared the entire world within in the first quarter of 2020. At the beginning, we observed the heroic efforts of Chinese medical and healthcare personnel, alongside other Asian countries, as if it were an action movie. We were sitting in front of our TVs, discussing the latest updates with our friends and families; increasing number of infected people, etc. We retrospectively examined the SARS pandemic, which took place in 2002/03, to see whether this time China will also manage the pandemic well. 

However, events in 2020 are different and actually much worse than in 2002 and 2003. From China, the virus had spread to South Korea, Japan and other smaller South-east Asian countries. Next was the Middle East, with a massive outbreak in Iran. Europe was attacked in February, wherein the first country hit was Italy, followed by Spain, with the pandemic having spread to Western Europe, it is now approaching the Nordics and Central and Eastern Europe. Within a few weeks, the US became a country with the highest number of confirmed cases. Certainly, this is linked with the American strategy to test as many people as possible. As of the time of writing, there are almost 1.3 million people infected with 70 thousand casualties worldwide. 

COVID-19 does not respect man-made borders or nature's oceans, it is conquering the entire world. It is more dangerous and deadly than originally thought and is impacting many aspects of our daily lives and routines. 

SOCIAL

Lockdown - based on the statistics from the beginning of April, about 25% of the world’s population is pushed to stay home. We are not free to leave our homes; which is perhaps fine for a few weeks or a month. What would be the situation if the lockdown lasts for longer? What would be the people’s reaction if there are some problems with the internet or food supply? People are spending days, weeks and months inside. 

Our home - our house is becoming more than a home, it is getting new functions. It is more like our new habitat, the place we live in. We cannot leave our apartment or house, so we spend 24 hours stuck inside with our families. We work form home, we shop from home, we exercise at home, we eat at home. We are doing everything at home!

MEDICAL

Unknown - we do not have enough knowledge and understanding of COIVD-19. Still, we have more questions than we do answers. We did not take lessons from the SARS epidemic since it mainly hit Asia whilst the rest of the world remained untouched. Based on recent statistics, we know that a large percentage of the infected population are asymptomatic (don’t show any symptoms of the sickness), however, it is very dangerous for older people. 

Vaccination - currently, there is no vaccination or cure. It looks like the vaccination may be available within 12-18 months. At the beginning of the 20th century, the Spanish flu killed over 50 million people in the world, but it was a pandemic we overcame. 

National healthcare systems - a pandemic is a massive test to our national medical systems. Each country attacked by COVID-19 deals with an increasing number of severe cases, lack of life-saving equipment, limited supply of protection equipments (e.g. masks), disposable vino gloves and overloaded medical professionals. 

ECONOMICAL

Travel - in our global economy, travel is essential. We are not spending our entire lives in one location. We go to key academic centres of studies, we change locations due to work, we travel for business or visit other locations during our holidays. We move towns, countries or continents permanently. And now, at the beginning of 2020, it was cut out immediately. We cannot travel anymore, planes are grounded, trains don’t leave railway stations, buses and cars are parked. 

Recession - based on the experiences of China, Italy, Spain and other countries, we see that the economy stands still when it gets infected. Consumers cannot leave their homes and they stop spending money. Some industries, like Airlines, are experiencing drops in turnover reaching -90%. Many businesses like restaurants, high-street shops, theatres, cinemas, coffee bars, gyms and parks are closed. Many companies are on the edge of bankruptcy. Only in the US, during the last two weeks, almost 10 million new people applied for unemployment benefits. A pessimistic, but highly likely scenario predicts that the US unemployment rate may reach 15-20%. Are we going to experience a repeat of a recession like in 1929-1933? Governments and central banks do not want to wait and simply watch these future developments. They have started adding liquidity into the financial systems. The US government announced a fiscal stimulus programme of USD 2 trillion (!!!). This shows us the seriousness of the economic situation and how we need to act now, as if the recessions is just around the corner. Each government is looking for ways to help small businesses, national companies and global corporations. 

New business opportunities - as described above, our homes are being turned into a cell of operations. We are doing all activities within our four walls. This new situation opened us to new services which provide us with convenience, which we are more than willing to pay for these days. Online shopping and home delivery services are experiencing very busy days. Businesses like Amazon, Tesco, Walmart or DHL are having to employ extra staff due to higher demand. When we work from home and need to connect with our coworkers or business partners, we need to buy and use technology to stay in the game. Skype, Zoom, Microsoft Teams, Slack, Monday are names we have heard or experienced recently. Being at home with your loved ones is a blessing and a great opportunity. However, it may be a bit of a challenge once you need to concentrate and work. When kids have home (online) schools, it is not a problem, but once they have a school break, like eastern it could be disrupting. There are many opportunities to keep us occupied these days; we can download books from e-book stores directly to our devices. There is a possibility to buy a movie, or music streaming via Netflix, Spotify, Disney+ or Apple Music. There are many workout programmes available online or via apps. Your family will be happy and you will be happy as well!

GEOPOLITICAL

Globalisation - the world as a globalised economy was put on hold. China, as a global production hub, was put on hold for 1.5-2 months. Global supply chains have been disrupted or broken. Are we going to watch the end of globalisation, or at least some changes or adjusters to our current model? Are we going to relocate production from China to other countries in Asia, or even in Europe and Mexico?

Global hegemony - discussion about a hegemony in the world had started some time ago. The USA understood that their global leadership is under challenge from China and they started implementing tariffs for products imported from the Asian superpower. Recently, based on pandemic developments in Europe and the USA, some people claimed that China could have played with their pandemic data and statistics to create a wrongful perception of the pandemic. Europe and the US could have started form a wrong place and with a wrong plan. We observed a much higher number of infected people and higher fatality rates than in China. 

European Union - it is a big test for Europe. The Pandemic attacked the continent from the south, the weakest part of the EU where countries have a significant debt-to-GDP ratio. Portugal, Italy, Greece and Spain have debt over or around 100% of their GDP. If an economic crisis hits them, they may go bankrupt. At the beginning, we observed an increase of importance of coordinated national strategies in fighting the pandemic. There was no common plan, no support and no strategy. Now, the situation is changing as European governments have started to support each other, sending over doctors, medical equipment and allocating money from he EU headquarters in Brussels. They understood that they need to be united if they want to defeat COVID-19. Additionally, what about BREXIT? Is it the first and last exit in Europe, or will the pandemic start the process of the European disintegration, perhaps a discussion on a New European Union?

WHAT CAN WE EXPECT NEXT?

Short term - First and key priority is to start controlling the pandemic and to develop a vaccination. Governments and companies are combining their efforts to take a lead in this race. They have also started preparations for lockdown exit strategies. An economic crisis caused by this pandemic can be more deadly than the disease. So far, the internet, electricity and home food delivery are working. Imagine what may happen if there is no water, no food or no internet connection? We may see more people on the streets, which is why some governments are introducing guaranteed incomes. If you do not work, you are not paid; if you are not paid, then you don’t have savings and cannot buy food. 

Medium and long term - Superpowers, USA and China, will continue their wrestle match. It is a part of our history and, from history itself, we know that no military or economic empires last forever. The Roman empire, Ottomans, the British Empire and USSR had their beginnings and their ends. Is it the time for a change now? We will see - history is being played out in front of our eyes. Definitely, there will be some changes and adjustments in the case of globalisation. It is now the past. Global corporations will move productions from China to different, more business-predictable locations. Additionally, humans, as a weak link in production and supply chains, will be replaced by robots and Artificial Intelligence. 

As I wrote in “Coronavirus - Black swan event impacting today and tomorrow (Part I)” COVID-19 is a black swan event impacting all areas of our lives. We need to discuss and redefine our priorities, the way we live, interact with our families and other people, the way we work and spend our free time. It is a catalyst for change.