The Corona Pandemic and the Economy; Where Do We Go From Here

As the coronavirus ravaged the world the global economic structure began to crumble under the weight of repeated closures and remote working conditions.

No country was immune to the economic effects brought upon it by the coronavirus pandemic, and countries began to scramble reactive plans in order to limit the damage and maintain some sort of economic output.

GDPs took a major hit, especially in May and June of 2020, and the whole year’s effect on the world’s economies took its toll; it is estimated that the entire global GDP went down by a massive 3%.

Global shutdowns meant that supply lines were halted, normal consumer behavior was thrown out of the window, and businesses struggled to find some normalcy in continuing their day-to-day operations.

Major economies were not spared either, as global economic powerhouses such as the US, Japan, and the EU all saw major dips in their GDPs amounting to 4%, 5%, and 7% respectively.

The disruption of value chains meant that countries had to rely more on internal production and manufacturing to meet their imminent needs, while companies had to revamp their entire operational and financial processes to adapt to what was then the “new normal”.

Some sectors were hit more than others, the airline industry, for example, has seen colossal losses estimated to be above 370 billion USD. Yes, billion with a B. The tourism industry was also greatly affected, while other sectors such as gyms and spas were not shown mercy.

The private education sector also took a hit, as school closures meant that private schools had to maintain their edge in a time when everyone was getting their information via the internet.

While the vaccine rolls out in colossal numbers the world has not yet seen the effects of the pandemic disperse, and now corporations around the globe have begun innovating new ways to keep their businesses afloat.

That is not to say the world has not benefited from the proverbial step back, as the coronavirus pandemic has forced global powers and titans of industry to push their innovation efforts to the maximum in order to respond, and some of the changes we have seen may yet be beneficial in the future and enable global economies to recover. Here are some of the effects that have arisen from the pandemic.

A higher focus on flexibility

One thing that was apparent during the pandemic that supply and value chains built upon cost-effectiveness would not survive the pandemic. Companies revamped their supply chains to become more flexible and agile in order to meet global demand and not lose any customers. This has separated the companies who can innovate from those who can’t, and the former who adapted to global shipping restraints were able to maintain their clientele and onboard new ones.

Quicker innovation

The coronavirus vaccine is considered by many as a gargantuan step in the world of medication. A process that would have taken years and even decades were squished into months, and the results up until now are breathtaking. This level of innovation in vaccine creation, which was thrust upon the world by the pandemic, has opened the door for endless possibilities in the drug industry. Pfizer, for one, has not stopped by creating the vaccine but recently announced that it will soon slash production times into half.

Unlikely alliances

The global pandemic threw caution out of the wind for most global corporations and we say many unlikely alliances pop up in an effort to combat the effects of the pandemic on the world. Pfizer is another great example here, having announced its newly-established partnerships with competitors Sanofi and Novartis in a bid to increase vaccine production.

Higher reliance on technology

Be it Zoom meetings or cloud-based software the world had to go completely remote and rely more heavily on technology to conduct day-to-day operations. Education, corporate practice, government activity, and more have now become reliant on technological aid. Although inconvenient at first, the world is coming to understand the benefits of relying on technology; especially when it comes to time management and cost-effectiveness, and it seems it is here to stay.

There are of course many lessons brought upon the world by the pandemic, but the most important one for the economy is to maintain this high level of innovation.