Just as some patients recovering from Covid-19 suffer long-lasting symptoms, it’s becoming clear that the same will be true for the global economy once this year’s V-shaped rebound fades.
“Getting back to the pre-Covid standard will take time,” said Carmen Reinhart, the World Bank’s chief economist. “The aftermath of Covid isn’t going to reverse for a lot of countries. Far from it.”
Pandemics are one of many global concerns that require collective action. In many ways, COVID-19 has been a wake-up call for the worldwide collaboration required to tackle other threats. Therefore, humankind – more than before – should stand together to tackle the impact of the virus on the economy and its harmful consequences.
COVID-19 Impact on Economy: Not all countries will be affected equally.
The International Monetary Fund sees advanced economies less affected by the virus this year and beyond, with low-income countries and emerging markets suffering more — a contrast to 2009, when rich nations were hit harder.
The economic consequences of coronavirus will no longer follow a V-shaped growth pattern, a sharp downturn followed by a sharp upturn. Growth is now likely to be U-shaped, a longer downturn, as news of the Chinese slowdown is compounded by similar news in Japan, Italy, and probably the US and elsewhere in the future.
There is now a real possibility of L-shaped growth, slower growth for some time in 2020 and 2021, if deglobalisation accelerates and the real crisis in supply and demand spills over to financial markets.
The coronavirus pandemic and the ensuing economic crisis are evolving rapidly in scope and severity. To guide economic policy-makers in the months and years ahead, we need a better understanding of what is happening and what is specific about this crisis. We identified the following economic lessons and challenges to take forward:
- Economy and health are inextricably intertwined.
A thriving economy is built on the foundation of population health. What’s less well-known is that poor population health costs the economy twice as much because of premature deaths and lost productivity years. In the post-COVID world, health must be redefined as an investment rather than an expense, with the potential to boost economic growth in the years ahead.
- More global cooperation is required.
COVID-19 has emphasized the necessity of international cooperation in a variety of ways, from sharing health data to resolving global supply chain concerns. To address today’s difficulties, international collaboration is essential. International organizations will continue to play an important role in bringing stakeholders together to achieve shared objectives.
- Global health is a shared responsibility
Viruses do not respect borders, as we have seen firsthand. A global problem like a pandemic necessitates a global response, and it is every nation’s responsibility to prioritize public health for the greater good of humanity. Actions and inactions at the local level can have an impact on global health. As a result, we urgently want global health-system norms, as well as a procedure for reviewing and managing research that may be exploited in the future.
- Getting ready for the unexpected
The majority of multinational corporations have crisis management capabilities. However, the scope and cohesion of those capabilities vary greatly, which is why different organizations dealt with epidemics and pandemics in different ways.
A pandemic was rarely regarded as a critical danger faced by organizations before the days when coronavirus and social distancing became the new norm, and as a result, it was given a relatively low amount of attention in crisis preparation. Because some crises are impossible to predict by their very nature, businesses with an “all-hazards” management plan were better equipped to deal with the COVID-19 crisis than those that relied on scenario-based response methods.
Some major multinational corporations that operate as matrix organizations lack a clear understanding of their global reach. As a result, during the crisis, business divisions and national operations were disregarded. Organizational disconnect during any crisis can be substantially decreased by creating a thorough organizational map of all sites, offices, and any other presence around the world. This has been identified as a critical component lacking from many businesses’ past crisis management plans.
- The media’s and the public’s effective roles
Along with official public health efforts, raising public understanding about how to prevent COVID-19 from spreading, has been a crucial strategy in slowing the virus’s transmission. False cures, myths, and fake news have claimed lives, and journalists have never had a greater obligation to get the science right. Despite the fact that social media is used to promote a lot of misinformation, it’s great to see scientists utilize these channels to challenge disinformation with facts. The United Nations has also begun to encourage social media influencers to help distribute accurate information about the pandemic.
- From disaster recovery to business continuity
Many businesses have been compelled to embrace remote working as a result of the pandemic. Despite posing an initial barrier for IT, this has been a good move for the majority of enterprises, demonstrating their ability to accept new methods of working. While office workers were able to work from home and continue to perform support responsibilities, many manufacturing and retail operations were halted.
Most firms’ business continuity skills were put to test during this global crisis, and many flaws were exposed. Some companies with manufacturing capacity in a single country had to close their operations for weeks because they hadn’t anticipated entire national lockdowns. Over-reliance on a single mode of transportation was a problem for several firms, especially as commercial freight-carrying plane traffic fell. Any significant sites of failure identified during the crisis should be remedied, whether they are in areas of operation, supplier utilization, or freight delivery mode. This can be accomplished by reorganizing supply chains to lessen reliance on a single country or provider, diversifying activities when possible, or putting in place solid backup plans.
According to our experience, a normal crisis reaction lasts a few weeks, whereas recuperation can take months, if not years. The virus has not gone away, and businesses and organizations must learn from their mistakes and improve their preparations for this and future events.