What Will the Global Economy Look Like After COVID-19?

By Gene Lin

The coronavirus disease – officially named COVID-19 by the World Health Organisation (WHO) – has caused unprecedented disruptions to the global economy within the span of two months. The scale of the pandemic is historic and all-encompassing, prompting governments, businesses and individuals to rethink their strategy for years to come.

At the time of this publication, COVID-19 had already infected over 1.9 million people worldwide. Among them, at least 123,000 patients had died from the symptoms of the virus, according to the WHO.

The Centers for Disease Control and Prevention reported that at least 9,000 US healthcare workers were infected with the coronavirus as of April 9, 2020. (Photo: unsplash.com)

Without any vaccines in sight, social distancing remains the only way to keep the virus from infecting more people. With the examples of China, Italy, and the United States, there is a steep price to pay when social distancing is not implemented properly during the early days of the pandemic.

However, slowing down human activity at such a rapid scale also takes a huge toll on the global economy, forcing businesses to close down and people to lose work. An impending global recession seems almost inevitable as the United States announced a staggering 22 million new unemployment claims on Thursday – a number that easily dwarfs its corresponding statistics during the 2008 financial crisis.

The COVID-19 crisis asks a critical question: How do we restructure an economy that is able to function without the scale of human interaction most people are accustomed to? Or in short, how does an economy work when economic and social activities are lacking?

Stronger Social Safety Net

Based on the government responses in different countries, it is clear that strong public health infrastructures play an instrumental role in suppressing the spread of COVID-19. Taiwan’s centralised universal healthcare system allowed its government to test for the virus, and track down potential carriers at remarkable speed; while the United States’ fragmented healthcare infrastructure left many citizens fending for themselves.

A post-COVID19 economy would require people to conceptualise the social safety net as a universal good, particularly healthcare. Since the virus spreads so easily once it enters the human population, no individual is truly safe as long as one person remains vulnerable to the disease.

“It’s really important to know that one of the lessons from the past – and this goes back to every major outbreak since then – has had one common lesson, which is that there is no country that can be an island in the face of a large outbreak like this,” said Keiji Fukuda, School of Public Health Director at The University of Hong Kong in a radio interview.

Meanwhile, the private healthcare sector faces imminent disruption in the post-COVID19 world. The sudden awareness of the need for universal healthcare would prompt governments to expand the public sector to varying degrees.

India’s healthcare system – which is around 70 percent privatised – is expecting a major disruption after the pandemic passes. The country now has the 18th highest number of infected cases worldwide, according to Johns Hopkins University.

“The private sector will definitely take a significant hit,” said Dr. Vishavdeep Goyal, a healthcare management expert with 15 years of experience in western India. “Post the pandemic, I believe there will be a significant increase in spending by the government on the public [health] sector.”

Dr. Goyal added that the private health sector should focus more on technology, automation and innovation in order to stay competitive in the post-COVID19 economy, as it has an edge in terms of resources and talent.

Essential workers are keeping the economy alive during the COVID-19 pandemic, but often at the cost of putting themselves in great personal risk. (Photo: unsplash.com)

Rethinking The Value of Essential Workers

As the world’s economy is put on life support, nation states are facing a reckoning on how they should treat essential workers during a pandemic. Essential workers such as warehouse workers, grocery store clerks, and delivery service workers are keeping the economy alive in a time when human activity is no longer possible.

However, this rapid paradigm shift also exposed a long-standing power gap between essential workers and their employers. The ongoing strike staged by Amazon workers provides a glimpse into the discrepancy between the value of these worker’s services and the value society assigns to them in terms of protection and wages.

The post-COVID19 economy might see a stronger focus on labour law protection across all industries, but especially low-wage workers who provide basic services the economy cannot exist without.

As non-essential workers adopt work-from-home policy in droves, video conferencing platforms such as Zoom have seen a sudden uptick in users. (Photo: unsplash.com)

Remote Work Becomes New Norm

While essential workers who must work outside are fighting for better working conditions, those who can afford to work from home are facing a different set of challenges. With a large portion of workers now trying to simulate workplace environments through the internet. Apps such as Zoom, Google Hangouts, Houseparty, and even Discord are being seriously tested for their capacity to support the economy.

“There are a few key items to consider. First of all, ensure that everyone can actually work from home. They need to feel supported and have the right access to systems and technologies,” said Lonneke van Zundert, veteran financial crimes and security expert based in Asia.

“But not everyone or every country has a work-from-home culture,” van Zundert added, “for instance, houses in Hong Kong are small with, sometimes, multiple family [members] living in the [same] house. People live their lives mostly outdoors, so having everyone to suddenly work from home, in combination with homeschooling, is very challenging. ”

While users have raised concerns over privacy and security about many video conferencing platforms, these technologies will only become more refined and integrated into day-to-day business operations. The initial cost of transitioning into such a work style is high, but once the system is in place, remote work can become the new norm as it saves cost, space, and time.

The world economy is seeing gradual signs of deglobalisation amidst the pandemic, in which corporations and nation states become less interdependent on one another. (Photo: pexels.com)

Smaller and Decentralised Economy

With all the disruptions in the global supply chain that took place during the global pandemic, it is almost certain that the supply chain will never be the same again. Earlier this month, geopolitical watchdogs at The Spectator Index noted that Japan’s government would spend upwards of USD$2 billion helping its multinationals leave China.

This time, the driving force of a deglobalised world is no longer tariffs but the coronavirus, as countries and industries that rely heavily on China’s manufacturing hub realise what a nationwide production halt in the world’s second largest economy could mean to their financial performances and economies.

To redesign the post-COVID19 economy would require a great deal of innovation, forcing people to abandon deep-rooted beliefs about how the world should work. “The spread of the epidemic amounts to an experiment in deglobalisation. Barriers are being put up, not to halt trade and migration flows but to stymie the spread of infection,” wrote the editorial board of Financial Times. “This leaves the global economy largely at the mercy of nature.”

As decades of globalisation begins to unravel, countries with smaller but self-sustaining economies stand to benefit the most as they retain their competitive edge, while those that thrived solely on the wave of globalisation risk seeing their clocks being reset.

If the pandemic extends further than the scale our current economic system can withstand, the story of the post-COVID19 economy could be about a reshuffling of the international power structure in a globalised world. But also, the resurgence of small players that were left behind before that world came to be.