Bad time for a long time
What our future looks like with the panic over coronavirus pandemic
Given the difficult times pushed upon us by the ongoing coronavirus pandemic, panic has caused in several areas of interest. This includes the economic, social and cultural aspects that will change many things for a long time. In this article, I will present my online research I did following several generally accepted as reliable sources.
The Outbreak
The paper by A Novel Coronavirus Emerging in China from New England Journal of Medicine [1] mentions that China has released the emergence of the virus to the WHO, which later suggested measures to dampen the effect of the pandemic, by then which was not one. The initial outbreak suggested that the virus was not as severe as SARS or MERS as per the statistics observed in the region including China, Thailand, Korea, and Japan. In contrary to the study, we are in a different position at this point of time.
Chinese Lockdown
With the lockdown of the Chinese suburbs Hubei and Wuhan the supply shortages emerged in China panic caused people to panic buy Items, based on the notion that purchasing must be done while they can. The critical part of the panic purchase lies with the resultant shortage of pharmaceutical items, that some people rely heavily on [2]. Furthermore, without a doubt, the tech industry has predicted delays in shipments and reduction in manufacturing due to the hindered logistics and labour supply. Having many countries depending on imports on China, the chain reaction would cause further panic (genuine and stimulated) in other parts of the world. This has pushed several essential items to be produced locally which would other wised be imported from China. For example, many countries started making their own masks, gowns and medical equipment.
Economic Impact
When the supply from major manufacturers is predicted to decline, it is obvious that companies selling such item are not going to make huge profits. This, in turn, means that the shareholders are not going to benefit much, or would rather suffer huge losses should the situation escalate. This raises the next panic, the share market withdrawal. Usually, this happens way before the public panic. For example, ASX (Australian Stock eXchange) hits a downturn of 9.7% on 16th March 2020 according to the guardian [3]. Furthermore, more than 30% of the entire value of the ASX has been wiped out, the same source says. This means that the companies are likely going to lose out profits and have to go through layovers (let’s hope not). The world economic forum says that US stock market has been rendered volatile owing to the COVID-19 panic selling [4].
It is also predicted that nearly 1 million Australians will be facing unemployment [5]. Similarly, it is predicted that US will face uplift unemployment from under 4% to at least 10% during the due course. What would this mean in for the behaviour of the immediate economic indicators?.
Recalling the Great Recession of 2008 [7], which emerged as a result of subprime mortgages (which in laymen’s terms, means the circulation of mortgages between enterprises which later had to writeoff causing massive devaluations. This caused people to sell homes than paying mortgages, which increased supply over demand. Mortgage companies claimed insurance, causing insurance companies to go down, so goes the entire chain down.), we might as well see something similar happening. There were several statements mentioning about mortgage freezing so that people will not have to pay until they recover their income. Would the banks survive? Will it cause people to sell mortgages again? Will people declare themselves’ bankruptcy? The answer to these questions will decide the impact on Insurance companies securing the mortgages. Moreover, unlike in 2019, we do not see a clear way out of the bubble as we do not know long the situation will last. Worse fears lie behind the public panic!
With the increase of regulations of how businesses operate, it has been clear that almost all goods and service providers run on diminished capacity. This necessarily causes idle staff or layovers. This has a very high impact on families that rely on part-time and casual employment. This can result in loss of rental payments, utility payments more reliance on unemployment benefits and in emergencies of health without insurance, people could be left in very difficult times.
Food and Harvest
Food is a biological necessity. However, the sources must be secured from disruption. People have been panic buying, and with the lockdowns, people try to get things done online [8]. It has been announced by many countries that the food will not be gone out of supply in the foreseeable future. But, the important questions could be a little out of straight sight. The panic purchases have caused supermarkets to run out of selling stocks at times it is hard to serve an above-average demand due to suboptimal logistic arrangements. This put the vulnerable groups of society at risk of starving. Although governments try to facilitate special service hours in the morning, such groups might find it further difficult to do purchases on such times.
Although in a normal scenario, harvest and the consumption could have streamlined behaviour, we might see much longer delays with the pandemic. This is further worsened by panic buyers. This is because over purchasing usually results in overconsumption. Such high demands can also lead to abuse by opportunistic black market dealers resulting in inexpensive goods which could otherwise be much cheaper. This again leads to the decline of personal/family economies.
Long-Lasting Social Impact
Many changes of lifestyle have been imposed upon us given the difficult times. Working from home, delivered to the home, grow your own, buy the hen not eggs, food stockpiling and not going shopping, no handshaking and social distancing have become jargons of the age.
It is very likely that people might make it a habit to work from home and get things delivered. This could both be positive and negative. Some jobs would be left obsolete while new jobs would be created. People are motivated to have their own sheds for necessary food items, leading people to buy hens instead of eggs [9]. This sort of makes a regular purchase a one-time purchase, rendering such businesses in a different market segment.
The system of education has been transitioning towards an online fashion. However, there has been no motivation to go complete online until this day. Thus we can expect more online courses getting popular. This might also make thins a lot better for well established online education offering web sites. The same scenarios apply for the concept of working from home. The organizations would decide to have more workers remotely joining while only essential workers are placed at workplaces. In the long run, companies might save a lot of money by having staff working from their own houses. This might even favour small companies by cutting off many fixed overheads.
Conclusion
This are changing rapidly. Moreover, many slowly changing things have become catalyzed. However, the gravity of the downside due to human and economic losses aren't simple. The only way out is the positive attitude, flexibility to change and acceptance. It is very important to avoid the panic that might result in a whole chain of other actions.
Stay Home, Stay Safe!
Cheers.
[1] Munster, Vincent J., et al. “A novel coronavirus emerging in China — key questions for impact assessment.” New England Journal of Medicine 382.8 (2020): 692–694.
[2] “FDA anticipates disruptions, shortages as China outbreak plays out”. FiercePharma. Archived from the original on 26 February 2020. Retrieved 26 February 2020.
[4] https://www.weforum.org/agenda/2020/03/stock-market-volatility-coronavirus/
[7] https://en.wikipedia.org/wiki/Great_Recession
