We are currently at a crucial juncture in the war against COVID-19. Countries that managed to “flatten the curve” are now beginning to look past the public health crisis, towards an imminent recession that could rock their socio-economic structure to its core. Italy – the hardest-hit country in Europe – has now begun to ease the lockdown regulations for few businesses, albeit with a number of caveats. Spain, a country whose reliance on manufacturing and service industry makes extended lockdowns a costly affair, is also looking to begin the slow restoration of business activity. Elsewhere on the continent, Sweden is now entering the first lockdown phase, as the number of infected individuals soars in the country. However, the variations in lockdown enforcement, across Europe, are not only down to the number of cases. In fact, political priorities are playing quite a prominent role.
If mainstream media is to be believed, the choice is between saving lives and dodging an economic catastrophe. According to me, this is too simplistic a choice to consider. We cannot submit to the alarmist question: your money or your life? The answer is both. One without the other should be unacceptable to any rational observer. The severity of the pandemic is now dawning on those who adopted a wait-and-watch approach, particularly the U.S. and Sweden. They could neither avert an economic fallout nor successfully contain the transmission. Today’s globalization and connectivity means the pandemic will not respect boundaries, and what happens in the Shanghai Stock Exchange will have a ripple effect that impacts the New York Stock Exchange as well. Therefore, what this pandemic warrants is a coordinated, multilateral strategy, one that consolidates both the public health and economic interests of all nations.
Sadly, most leading nations have had to turn inwards, securing their own interests as individual units at different points of a lockdown cycle. As I watch India’s PM Narendra Modi announce an extended lockdown, I cannot not help but wonder what the exit strategies are. How can we emerge from this lockdown? And when we do, what should industry be prepared to reckon with, in a post-pandemic world?
Balancing epidemiology and economics
India, for example, is entering another 21-day lockdown. According to a study by Acuité Ratings, which gave me some clarity, India’s lockdown is coming at an expense of $4.5 billion per day. In other words, the country is already looking at $200 billion lockdown-related economic loss, after two phases. The current priority for India – or any other country extending their lockdown measures – is not the economic loss but the public health. This approach posits that the more severe the lockdown, the sharper the economic rebound. If it works, health concerns will take a backseat after a successful lockdown, paving the way for the economy to make a steady, if not swift, recovery.
If we extrapolate based on epidemiological evidence from previous pandemics, there is a correlation between well-implemented lockdown and better economic recovery. And it is also advisable to employ a suppress-and-lift lockdown policy, with case-by-case relaxation across business and industry. Lately, I have come across reports suggesting a youth-powered economic revival, where young adults who are resilient to the disease can be permitted to restart small and medium-sized businesses. The eligible persons have to meet certain conditions to avoid aggravating the contagion, ranging from self-precaution to staying away from the elderly. If undertaken successfully, such measures could propel the industry in the right direction towards a revival.
The post-pandemic world
To estimate what might await us in the post pandemic scenario, first and foremost, businesses will need to evaluate their position, taking into account as many variables as possible. Some will be able to reopen unchanged after the pandemic, while some others may have lost considerable ground. Unlike the recession of 2008, businesses that require physical interactions have come to a grinding halt, while the demand for e-commerce and other online services has skyrocketed, during the pandemic. Organizations will need to take a cue from this and explore multichannel models, while enhancing their capability to address customer queries and sales, from digital channels. Instead of betting on preserving jobs that have disappeared during the pandemic, it is advisable to invest in areas that stood resilient.
There will be a renewed focus on contingency planning, with emphasis on crisis response, supply chain diversification and technology adoption. Organizations should actively address operational gaps that manifested during the pandemic. Multi-pronged foolproof business models will be put in place, with an exit strategy for any given event. Organizations will yearn for stability, but equal priority should be given to enhancing flexibility. The informal economy, which comprises taxi drivers, vendors and blue-collar workers, will become organized sooner rather than later. Medical infrastructure too will be revitalized through better funding and policies that safeguard the interests of all parties – from patients to doctors.
I believe the industry will never return to the pre-pandemic ‘normal’, in terms of consumer behavior, spending and priorities. Every previous pandemic has altered the course of history, changing perspectives in its wake. Public health remains the foremost priority, and once it has been secured, the economy can be revived sooner. What is needed is clear prioritization that addresses the entire spectrum of challenges, not a zero sum approach that sacrifices one set of goals to bolster another.
