The new economy: 6 ways how the coronavirus has changed the global economy

Summary

• The lockdown period has brought about many necessary innovations and realizations pertaining to better and more efficient ways to conduct business.
• The COVID-19-led lockdowns have accelerated this trend as companies have been forced to allow their workers to work from home using platforms like Zoom to run everything from business meetings to job interviews.
• Some businesses have addressed this problem of being compelled to ask their employees to work from home by employing automation to replace humans.
• Currently, there are ~50 banks around the world experimenting with various digital currencies.
• According to data released by The United Nations, global tourism fell by 72% last year, and some predict that business air travel could be completely eradicated as corporate businesses move to utilize online tools for businesses meetings.

The lockdown period, which began in early April 2020 and still bleeds lightly into today, has changed the world in a profound way.

Most outwardly, the public’s awareness of hygiene has become heightened as face masks have become necessary just as much as shoes or a shirt. The ever-present tub of hand sanitizer on every retail counter also something rarely seen before the year 2020.

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The coronavirus, and the adaptations it has caused, have also applied to the very fabric of our society – our economy. The lockdown has brought about many necessary innovations and realizations pertaining to better and more efficient ways to conduct business.

Work From Home

Perhaps this change was inevitable as communication technology has increasingly allowed people to work remotely. The lockdowns caused by COVID-19 has accelerated this trend as businesses have been forced to allow their workers to work from home using platforms like Zoom to conduct everything from business meetings to job interviews. Zoom has even been used for school classes.

The trickle-down effect from this revolution will continue to affect things such as commercial real estate to server costs as companies rely on advanced telecommunications to conduct business. For example, the aforementioned Zoom has grown 600% in the past year.

A lady working from home which has become the new norm (Source: © Scaliger | Megapixl.com)

The coronavirus also saw an exodus of city folk relocating to the country resulting in a surge in rural property prices. In Australia, prices of rural properties increased by as much as 10%, according to data released by CoreLogic.

Zombie businesses

With many small businesses forced to close their doors during the pandemic, federal governments were forced to offer stimulus packages to protect businesses.

However, with revenues drying up due to lockdowns, these businesses are unlikely to survive without government assistance, meaning they are essentially being kept on life support.

These “zombie businesses” are an overall drain on the broader economy, making it less productive.

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Increase in global poverty

In October 2020, The World Bank warned of a new generation of world poverty brought on by the COVID-19 pandemic. They estimated that between 88 and 115 million people would be forced into extreme poverty across the globe. In January 2021, that number was revised to between 119 and 124 million people, with around 60% of those residing in Southeast Asia.

This is devastating given that in the previous two decades, the number of people moving out of extreme poverty numbered around one billion people.

Robots in the workplace

One of the main concerns for businesses has been a loss of productivity, caused by lockdowns and social distancing resulting in workers unable to perform their duties at their place of business. Some enterprises have solved that problem by employing automation as a means to replace humans.

According to data released by the International Federation of Robotics at the United Nations Statistical Division, Korea and Japan lead the way in automated manufacturing, followed by Germany and China.

Although this innovation makes economies more productive, it also means that some jobs are no longer available.

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GOOD READ: What has the COVID-19 pandemic taught us? A look at five key lessons

The move to digital money

Up until 2020, the idea of moving to a digital currency was more or less considered a pipe dream of forward-thinking economists.

In some countries such as France, they have begun moves to introduce the digital euro.

A digital currency is money that exists digitally as opposed to physically, much like a cryptocurrency. Currently, there are around 50 banks around the world experimenting with various digital currencies.

Unlike cryptocurrency, however, the European Central Bank (ECB) will distribute the digital euro. This currency is like crypto in that it will be managed using blockchain technology and will be kept by the user in a digital wallet.

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Moreover, the lack of income has pushed many to invest in cryptocurrency, the most popular being Bitcoin.

The move towards crypto has seen digital assets like Bitcoin rise dramatically in the past year. Bitcoin prices, before the recent crash, had climbed to US$65,000 from just under US$10,000, where it stood in June 2020.

This radical shift has also convinced many that digital currency is the future.

The effects on air travel and tourism

Two of the hardest-hit industries throughout this pandemic have been international tourism and commercial aviation, as airports worldwide have been forced to close their doors to squash the spread of COVID-19.

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According to data released by The United Nations, global tourism fell by 72% last year, and some predict that business air travel could be completely eradicated as corporate businesses move to utilizing online tools for businesses meetings.

Moreover, events such as festivals and concerts where large gatherings are concerned may be altered even when the world comes away from the restrictions imposed by the pandemic. This is so because people have become more aware of things like social distancing, avoiding places where people are standing shoulder-to-shoulder.

If, on the other hand, people intend to continue travelling on the other side of this pandemic, they may be required to submit themselves to vigorous security checks not seen since the aftermath of 9/11.

In fact, a Chinese company, Tech Global, is currently trying to sell a “mobile disinfection booth” to airports worldwide. The so-called “booth” will administer a cold spray of mist designed to rid the body of pathogens in less than 40 seconds. The company reassures that the customer will not feel wet following the procedure.