Over a year ago in March, 2020, the World Health Organization declared COVID-19 epidemic had become so widespread that they constituted a global pandemic.
With a few words, Dr. Tedros made clear that the way in which we lived was going to change imminently and it truly did.
After several lockdowns, curfews, openings and re-lockdowns, hue and cry; let’s take a step back and see what has happened in the last one year and our major takeaways.
Decline in the Global Economy:
Never before have so many countries entered a recession at once, even during three more severe episodes, the Great Depression and the downturns following the two world wars.
The measures to restrict the spread of the virus infection, is itself shattering the core sustaining pillars of the modern world economies as global trade and cooperation succumbed to nationalist focus and competition for scarce supplies. Oscillating government policies , and seeping of killer virus through nations, affected production, disrupted supply chains has unsettled the financial markets.
Although in response to almost 7% shrinkage in global economy central banks in many countries, including the UK, have slashed interest rates. Theoretically,it should make borrowing cheaper and encourage spending to boost the economy.
Countries reliant on tourism, travel, hospitality, and entertainment for their growth particularly experienced large disruptions. Emerging market and developing economies are still facing the additional challenges with unprecedented reversals in capital flows as global risk appetite wanes, and currency pressures, while coping with weaker health systems, and more limited fiscal space to provide support.
Policymakers must also plan for the recovery. Policies should shift swiftly to supporting demand, incentivizing firm hiring, and repairing balance sheets in the private and public sector to aid the recovery. Fiscal stimulus that is coordinated across countries with fiscal space will magnify the benefit for all economies. Moratoria on debt repayments and debt restructuring may need to be continued during the recovery phase.
Stock markets have gone delusional:
The pandemic turned 2020 into a year of unprecedented events. One of those major events was unbelievable stock market growth amid all the 2020 chaos. On one hand small businesses were struggling for existence and more than 10 million people were unemployed and on the other hand the stock market was soaring high.
Wall Street’s resurgence was fueled by the largest federal government stimulus ever of printing more money. Investors largely ignored the pain on Main Street, including pronounced unemployment, overrun hospitals and battered small businesses.
Also, the low interest rates offered by the banks, and the lower liquidity of real estates attracted the investors to invest in other assets such as bonds and equities.
Biggest downfall of Hospitality and Aviation ever:
Coronavirus led to a worldwide crisis with its significant effects on the hospitality industry potentially heavier than those of 9/11, SARS, and the 2008 financial crisis.
On a business level, the impacts of the crisis have reached every industry in the world, with travel and tourism taking a massive hit. The worldwide travel restrictions on international flights have caused the global airline industry losses mounting up to $880 billion.
Governments can play a huge role in restoring travel and tourism industries. Few governments like France, Switzerland, and Spain have come up with aid of millions of euros towards rescuing all types of local businesses hit by the Coronavirus.
The hospitality industry will also have to learn to function in a way not seen before. As the relationship between each brand and consumer starts by building trust, regaining customer confidence will be the first step in overcoming the crisis.
The players in the travel and tourism industry need to bring new concepts aimed to develop emotional retreats and psychological well being not only for the customers but also for the employees.
Poverty is on it’s all time rise:
Year 2020 pushed almost 110 million people round the globe to extreme poverty which is estimated to rise to 125 million in 2021. For the first time in 20 years, poverty is likely to significantly increase.
A majority of upper middle- and middle-income people (earning between $10 and $50 a day) became low-income (daily wage of $2-$10) and poor (earning less than $2 a day).
A large driver of this rising poverty appears to be the South Asian region, which is estimated to have added nearly double the amount of people to the ranks of the globally poor as sub-Saharan Africa in the pandemic.
India seems to be the worst-hit country in South Asia, both in terms of contracting GDP and the sharp rise in the number of its poor. Although govts look at their GST collections and happily declare they are back to normal. Beside the fact that 80% of the economy lives in poverty and away from the gst bracket, which got hurt badly and has lost opportunities for their generations to come.
Fulfilling political agenda stayed far important than managing COVID crisis:
The COVID-19 pandemic impacted politics by affecting the governing & political systems of multiple countries, causing suspensions of legislative activities, isolation or deaths of multiple politicians and reschedulings of elections due to fears of spreading the virus. Where people lost trust in the government policies to combat the deadly virus, governments left no stone unturned to disappoint the public further.
- Despite a surge in Covid cases, Trump hosted several in-person rallies in states across the country. He held a number of events at packed airport hangars, where thousands of his supporters congregated without maintaining social distancing or wearing face masks resulting in more than 30,000 incremental confirmed cases of COVID-19 and more than 700 deaths.
- Not only the US but also the European Union failed miserably in the pace of its vaccination programme. European Commission President Ursula von der Leyen acknowledged the EU’s vaccine failures, saying: “We were late to authorise. We were too optimistic when it came to massive production and perhaps too confident that what we ordered would actually be delivered on time.”
- In the midst of a grave second wave with cases rising to numbers higher than 2020, the Indian government response seems to be completely lacking. The government is reluctant to impose reasonable restrictions because of state elections in few parts of the country.
Focus is only on fulfilling the political agendas rather than helping the vulnerables at the ground level. Governments have continued to be politicians rather than managing the crisis better.
Asset prices have skyrocketed:
In the pandemic, people around the globe lost jobs, and this led them to invest with the hope that it will help them with side income in future.
Abundant money printing during the pandemic and shaky stock markets, motivated people to find alternatives.
So people moved their money to ensure that its value is more or less conserved in assets like gold and real estate in the traditional system, or Bitcoin in the digital system.
Anything which has a limited supply, is seen as a store of value during these crises.
Somehow even after combating against COVID 19 from the past 1 year, we forgot to be compassionate.
Like on this planet and in this life, “we are in this together”