Even as we wade through the deadly fugue created by the Severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2, an economic apocalypse lies in wait. With a billion people worldwide locked away in their homes for indeterminate periods as yet, the potential loss to business is incalculable—$1 trillion just in 2020, according to the United Nations Conference on Trade and Development. In the long term, entire industries and sectors will be upended while jobs and income just disappear, leaving millions of people desperately impoverished.
A McKinsey Global Institute analysis indicates that “the shock to our livelihoods from the economic impact of virus-suppression efforts could be the biggest in nearly a century. In Europe and the United States, this is likely to lead to a decline in economic activity in a single quarter that proves far greater than the loss of income experienced during the Great Depression."
In human terms, of course, it has been a catastrophe with lives lost across the world and a surge of fear that’s going to take a long time to go. However, it is wrong to say that we’ve never seen anything like this. Maybe the numbers sound scarier today because of their immediacy, but even when the AIDS virus struck in the 1980s, people died in their thousands and with no known cure, there was a similar pall of gloom. In 1984, the year that the cause of AIDS was finally identified as the retrovirus HTLV-III, there were 7699 cases and 3665 deaths in the US, a fatality rate of nearly 50%. Yet, mankind survived as human beings adapted.
Covid-19 too will have a similar impact on our society and while it seems obscene to look ahead at the future, particularly that of business and economy, the early trends are starkly obvious. In what may be one of the few positive fallouts of the current calamity, smart countries will look to set up crack forces, not to fight other nations, but to take on this new kind of war, one in which the enemy can’t be trumped with guns and bombs. Already the war metaphor is a constant in most discussions around the virus. Thus, Vivek Murthy, the surgeon general of the US tweeted: “all I can think about is that in hospitals and clinics across America, my friends and colleagues are going to war against #COVID19 with no protection. Would we ever accept sending soldiers into battle without armor?"
It is definite that public health can no longer be the treated as the cost centre it has been for decades but as a pre-emptive investment against the kind of crippling economic paralysis we are seeing now. Global leaders—Donald Trump was only one among them—who saw stock markets as the only barometer of public satisfaction that they needed to keep an eye on are now realizing the folly of it. In the US, for instance, the markets—which had been on steroids for the last few years giving Trump boasting rights—have now wiped out all the gains they made since 2014. That’s a massive blow in an election year.
Within industries, the biggest change will be in pharmaceuticals and healthcare. Not only will we need a pharma industry that produces before the demand arises, but also one that has enormous flexibility built in to adapt to sudden and unexpected needs. This time around, the crisis is that of protective masks, gloves and ventilators. Next time, it could be syringes, defibrillators or sterilizers. The current shortages that are hampering medical efforts to test and treat show that nothing can be taken for granted. Medical device makers will need to create just-in-time manufacturing lines which would put paid to the current model of widely spread global supply-chains in favour of more closely placed raw material sourcing and production lines.
Indeed, with predictability in business now looking like a schoolboy joke, there is every possibility that most sectors will now examine this more centralized model of production, whether it is of smartphones or automobiles.
Hospitals are another area where we can expect massive change. Telemedicine, along with the increasing use of apps for monitoring as well as management of chronic conditions like diabetes and hypertension, will make hospitals the last point of contact for patients. Instead, hospitals would increasingly be more specialized and configured to deal with extreme cases.
Overall, expect human interface to come down drastically as robotics and artificial intelligence take over many functions. For that the healthcare industry will need the speed and split-second response times that only 5G technologies permits. Already there are working models of this. Market researcher eMarketer has reported how in January, “ZTE and China Telecom designed a 5G-powered system that enables remote consultations and diagnoses of the virus by connecting physicians at West China Hospital to 27 hospitals treating infected patients."
There will also be a backlash against the tragic deaths of so many older people who were virtually sacrificed so that scarce medical resources could be given to younger people who didn’t suffer from pre-existing medical conditions. Watch out for a rebellion in the ‘elders’ economy, with people in the 75+ age group insisting on products and services specially tailored to their needs. After all, the net worth of this cohort is far higher than that of younger groups. According to Federal Reserve data, the median household wealth of those in the 80+ age group is $2,70,904 as compared to the $1,37,866 for those in the 50-54 age group.
Sundeep Khanna is former executive editor of Mint