Winners and losers in a Covid-19 economy
The novel coronavirus started to expand into all corners of the globe from the very beginning of this calendar year, as the whole wide world watched the silent spread of the contagion from those affected in Wuhan, China—the origin of the scourge—and then from returning nationals in various parts of the world. By the time the world woke up to the grisly reality, the global pandemic was firmly afoot and Bangladesh—the 15th most affected nation—has been caught in its whirlwind since late March and is still reeling.
In late September, US business news outlet Bloomberg estimated a reduction in working hours equivalent to up to 500 million job losses worldwide due to the coronavirus pandemic. More than USD 3,500 billion has already left the coffers of government treasuries around the world to mitigate the hardships and healthcare costs on account of Covid-19.
At our national level, the government has already allocated a thousand billion Taka to prop up flagging industries. The annual growth projections have been chucked out the window and revenue shortfall has forced the government to arrange billions of dollars in loans from development partners as budget support.
At the micro level, however, there are both losers and winners in this evolving scenario. While reduced cash flows of most businesses have meant employers and employees alike have tightened their purse-strings, causing massive drops in sales of non-essential items such as luxury goods, high-end clothing and lifestyle products, at the same time, we have seen sharp rises in sales from small neighbourhood retailers, e-commerce purveyors, home delivery services, healthcare services and pharmaceutical products.
The other day, I was talking to a car battery seller who was bemoaning the fact that his sales have fallen by more than 60 percent. Contrast this with the corner shop just outside our home, where sales have gone up almost 50 percent. E-commerce vendors of food and daily necessities like Chaldal or Foodpanda have seen their number of daily orders surge by more than 200 percent. However, tighter family budgets mean that very few people actually go out to eat or buy new televisions or other big-ticket household items. So electronics distributors, hotels and restaurants, upmarket clothing and shoe retailers have all seen their revenue dwindle sharply over the last six months.
What could happen in the next two years and beyond? Coronavirus is not going away anytime soon. Even though more than a dozen countries and twice that number of pharmaceutical startups and giants have coronavirus vaccines under trial and development, it could be many months before they become commercially available to the general population. Even after widespread availability of such vaccines, two issues will remain—the vaccine will most likely be a seasonal vaccine like the one for flu, making it expensive for the bottom half of the population, and it will likely cover 70 percent of the virus strains, meaning vaccinated populations will still have 30 percent susceptibility to the virus.
In other words, the public health risks of coronavirus will likely diminish in the next year or two but will not altogether vanish. The World Economic Forum has delineated ten different scenarios of how this virus will continue to impact the economy and our livelihoods in the foreseeable future. The scenarios include resurgence of a second wave, heightened risks of cyberattacks, collapse of emerging capital markets, continued supply chain disruptions, weakening of major economies, tightening of cross-border movements, continued high levels of unemployment, permanent changes in the shape of travel and other industries, rising bankruptcies across the world and protracted global recession.
Will the new normal stick or will we revert back to the old ways? The onset of the coronavirus pandemic has greatly changed our lifestyles and work habits. People no longer shake hands or give a friendly hug, working from home is quite common in professional service jobs and online purchases and payments have become commonplace. People's hygiene habits have seen unprecedented improvements and as a result, incidences of contagious diseases like cold and flu have been greatly reduced. But the big question is whether these changes are here to stay or will we revert back to our old habits as soon as coronavirus eases up. All kinds of hypotheses are around and nobody has a clear vision through the looking glass.
There is now a huge hype around Industry 4.0 technologies such as artificial intelligence, augmented and virtual reality, internet of things, and others saving us from the detriments of Covid-19. While online work habits and tools have helped tide over the worst of being under lockdown and social distancing protocols, the pent up demands for conventional living and the social pathos of free mingling among family, friends, colleagues and business associates will not be mitigated by technology alone.
Industry 4.0 is not a substitute for the paraphernalia of human sociability—good urban planning, proper infrastructure, mass rapid transits in large cities, all-around functioning public utilities, safe eating and drinking places, closing social and business deals with a firm hand shake or a high five—the visceral experience and drive can never be fulfilled by technological props unless we all turn into some kind of cyborgs. More over, digital lifestyles will not allow us to escape from environmental pollution or congested living conditions. Fixing those require wide ranging interventions and only a handful of those can be helped along by information technologies.
The e-commerce and online transaction steam-roller will continue to get bigger across the world, and people's share of overall purchases and business transactions will continue to be devoured by this juggernaut in the foreseeable future. These businesses will continue to benefit from the impacts of the pandemic, while the international travel industry and brick-and-mortar retailers of non-essential goods will have to reinvent themselves if they want to survive without government handouts. In the short term, handouts or subsidies may be the only recourse available to retain jobs and absorb the shock of a world decidedly humbled by a virus that nobody saw coming.
Habibullah N Karim is the founder of Technohaven Co Ltd, a co-founder of BASIS and the coordinator of Blockchain Olympiad Bangladesh.