A Post COVID-19 WORLD: A look into 2021 and Beyond

Last month, the World Health Organization declared the new coronavirus outbreak which originated from Wuhan, China as a pandemic. The novel coronavirus is part of a family of viruses that cause a number of illnesses ranging from Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS).

Globally, confirmed cases of COVID-19 infection top 2,500,000 with death greater than 170,000. Although, these figures stand to be corrected on speculations that cases have been under reported in some economies like China. While we understand the evolution of COVID 19, its vulnerability as well as safety guidelines and effects on economic growth, it is as well important to have a view into life after the pandemic.

More than half of the countries globally are currently on lock down with huge volatility and uncertainty ravaging the financial markets than has ever been witnessed. U.S stock markets are down over 20% from their peak since Donald Trump got into government, increased jobless claims as 22 million persons filed for unemployment insurance benefits in 4 weeks, among other social distancing measures explains how much the virus has come to steal from humanity. Public gatherings large and small – in sports, arts, business and religions have been cancelled in response to overcome this nightmare.

Where and When will this end? How much policies are needed to keep the economy running? What countries are slow in responding? Are international organizations handling responses from the pandemic as expected or being eccentric? Will warmer or hotter earth slow infection rate? When will a vaccine appear?

Anyone who claims to have an assertive response to these questions is simply guessing. Instead, let’s peer past Covid-19 by imagining a year from now, say 2021. What will the world look like? Here are some expectations.

1.      Globalization and Trade: Coronavirus is a disease of globalization. As a result, post covid-19 could trigger more nationalization of companies. The more impact we see on the global economy, the more pressure we will be getting for decoupling. I do not expect that countries will be moving towards full decoupling but we might witness more nationalization of companies focused on meeting local demands thereby reducing the level of exposure to other countries should another pandemic arise in future. Just last week, White House economic adviser Larry Kudlow suggested that Washington should pay the cost for U.S companies (the likes of Apple, General Motors, Tesla among others) to move their operations from China back to America. However, these efforts would require careful implementation so as to avoid future tariff wars and trade retaliation.

2.      Supply Chain: With the closure of borders and vendors currently being shut out probably until a vaccine is found and broadly deployed, we might continue to witness disruption in global supply chain. This could trigger a redefined operation post COVID-19 where supply chain will be made more robust from Just in time to Just in case. Companies could move to keeping more robust inventories where less vendors would be required by increasing reliance on robots in value chain process since they aren’t susceptible to viruses even though this might become more costly. Also, global manufacturing companies might become more selective in terms of where to invest in comparison with returns generated; this would prove highly effective in reducing the number of participants in the supply chain. Hence, production could come closer to the consumer, encouraging more regional relationship and participation.

3.     Technology: In the last decade, we witnessed a bilateral war on intellectual property theft, forced technology transfer and a fight for 5G infrastructure where Chinese technology firms like Huawei, Alibaba among others were on the rise. The lessons we are receiving this time illustrates the power of technology in a pandemic. This experience will inform us how we monitor future pandemics by putting into place necessary infrastructures such as internet of things technology, 5G and big data. We have witnessed how application could result in better early warning systems, aid telemedicine and strengthened health systems because they could report and track who is showing symptoms of an outbreak. All of these efforts would require careful implementation to safeguard personal data and prevent abuse of the data gathered in line with relevant regulatory requirements.

4.      Digital Infrastructures: COVID-19 has caused humans to adapt to performing routine activities virtually and in isolation. It has allowed many of us to see the possibilities of continuing some practices which include keeping meetings, work out, attending classes, religious activities and more when sheltering from our homes. Personally, I realized that commuting for meetings and classes isn’t always essential and I have also learnt how effective video meetings can be during this time. While advanced economies are well positioned in this space, it is important that government of developing economies especially in Africa start putting into place, necessary strategies needed to drive virtual learning across school levels whether or not a pandemic arise.

5.      Redefined Business Model: Although, many businesses hitherto felt they had already broken into the online market space, COVID-19 has taxed the systems like never before as majority of transactions have to be conducted online. This has left businesses without such options available at a standstill. Retail is set to be one of the most transformed businesses post pandemic and this could have a spillover effect on unemployment. Restaurant might move towards online bookings and food delivery and are expected to remain competitive whether or not they maintain an accessible location. There could also be enhancements to logistics and delivery systems to accommodate surges in demand arising either from shoppers’ choices or the possibility of a future pandemic. If you fit into the space of an investor or entrepreneur, you might want to start looking in this direction.

Also, cinemas, performance and theater arts could also lean further to a model where tickets can be booked online and spectators could watch a live performance virtually from the comfort of their homes

6.      Lifestyle: COVID-19 has made us aware that frequently used objects such as laptops, keys, door knob, cell phones, copper, aluminum and other items made from plastics are susceptible to transmitting diseases, so in a post COVID-19 world, it is expected that individuals would pay more attention to personal and workplace hygiene. Before the pandemic, we had witnessed a massive roll out of digital payment options through mobile devices as engineered by fintech and banking institutions which were less patronized. However, as people become self-aware and wanting to limit what they touch including currency notes, an option to make cashless payment might be on the rise which could help attain government policies towards maintaining a cashless economy especially in Africa. Social distancing which proves effective at limiting the spread of the virus could also influence our lifestyle by limiting the number of people we shake hands and share personal spaces with alongside the type of gathering we spend time in. Although individuals who predicted that the pandemic would usher in a new lifestyle totally built around teleconferencing and virtual entertainment would have forgotten that human nature doesn’t change fully. People like to travel and convene easily especially when they are bored, so life after the pandemic wouldn’t lead to the end of global travel and tourism.

7.      Global Growth: At this time in a pandemic, we are witnessing a period where coordinated monetary and fiscal policies are being unleashed with the aim of preventing an economic fallout. Fiscal stimulus in US accounts for about 35% of GDP, Japan at 30% of GDP among others whereas there’s a constraint on fiscal capacity from emerging markets who are faced with huge needs but limited capacity to meet those need. According to a Bloomberg report, fiscal stimulus in emerging markets hovers between 1-2% of GDP (India stands at 0.8 % except for Brazil and Chile which is around 4%), limiting the ability of these government to support the economy except to source for debts and aids at this period.  

Although, some individuals are concerned about rising debt levels after the pandemic, debt matters mostly in terms of what you do with it. If the debts are used to finance productive capital investment especially in developing economies, future economic gains after the pandemic will be sufficient to repay such debt at maturity. Also, I expect that the current monetary and fiscal stimulus should aid a speedy recovery in global growth which would as well support emerging markets through increased exportation of commodities and crude oil.

Finally, the argument on whether a V, U or L recovery would happen after the pandemic depends on how long it takes to get a vaccine and how much support the economy will be getting at this time.

COVID-19 is currently tossing our plans and patience but also helping us build resilience through tough times. In a post COVID 19 world, I hope we will be able to take these lessons and develop more solutions in maintaining a better world.

Special thanks to Nkechi Okochi and Aisha Bamigboye for their contributions.

Bibliography

• Bloomberg Webinar: Beyond the Headline of Global Pandemic
• CFA Institute Global Panel: COVID-19 Implications
• https://www.forbes.com/sites/bernardmarr/2020/04/03/9-future-predictiona-for-a-post-coronavirus-world