There are many events that have happened in human history that have changed the course of history in major ways – and if they did not happen, then we would have seen history taking alternate paths entirely. The major scientific discoveries, major losses of life, increasing development of scientific discovery, and changes in nature would have happened in a different way.
That brings us to the reality of today, when we are now facing a new pandemic – COVID-19. That disease alone has gotten 2020 off to a rough start, and cases are rising throughout the world; in fact, it is so serious, that there is no continent it has not touched. That also means that the global economy will need to find ways of rising to the challenge, and businesses need to adapt to the changes it presents for a better future ahead.
What are the challenges the global economy is facing?
The increasing quality of healthcare means that diseases and their effects on humanity have reduced significantly over the 20th century, but we are now looking at a disease that has spurred a global crisis for the first time in many decades.
The impact of the pandemic has been significant on businesses and workers alike, as social distancing requirements from governments to slow down the spread of the illness have slowed down the growth of businesses everywhere. It is only certain businesses that have been allowed to remain open, because they provide essential services like healthcare, with everyone else have to change their method of doing business like provide takeout services – such as restaurants.
Even though not all places are under lockdown rules, the effect on businesses is their slowdown. Event venues and hotels are experiencing mass cancellations, shut down, and reduction of flights or cancellation due to airlines losing business, and that is dealing a bigger blow to the global economy than we might think.
In fact, there are many experts who agree that the global economy is going through sudden shocks because of the sudden stop in consumer spending, which is a major cause for the growth of economies around the world. The resulting recession is likely worse than the terrorist attacks of 9/11, and it is made even worse because none of us know when it is certain for people to return to normalcy again.
The crisis is not just limited to this though – the impact is worse because of the changes in the service sector, which has been heavily affected by the downturn in both client spending and business growth, as many of its jobs cannot be performed remotely.
There are many in these industries that share they have reached a dead end – perhaps you feel the same way, especially if you have been living from paycheck to paycheck. If you own a small business, you may not have the luxury of keeping employees that have a lot of idle time because of the downturns in the economy.
What are the results to expect in the future?
All of these scenarios can make you easily wonder what the future looks like – not just for you, but your friends, relatives, and vulnerable people in your society. The truth though is that there are various scenarios in the future, and all will depend on how societies and governments respond to the pandemic.
Here are some pointers:
Small changes are insufficient
The COVID-19 epidemic exposes a problem in the current economic structure we live in, which is similar to climate change efforts: they are both socially driven. That presents a solution to the COVID-19 cases – we need to understand human behavior and the economic context it offers, instead of just managing the virus itself.
The process of tackling the pandemic is easier when you reduce the level of non-essential activity. Because businesses will require plenty of people to mix together and infection spreads, the reduction of these activities will reduce the transmission rates, and this allows for other control methods. One common control method is isolation and contact tracing, where the contacts of the infected person are identified and isolated.
Recessions
The pressure on a global scale is enormous, and the possibility of recession looms large. There are some leaders that are calling for reductions of lockdowns, although the application is still met with plenty of skepticism on whether the measures are effective enough.
The reality of economic collapse is rather straightforward, as businesses will collapse and are less likely to employ people if they are not selling their products and services. If you own a business, you might decide to hold on to your workers in the initial downturn, hoping that things will get better, but eventually think about laying them off if things do not improve. Because of this, people are scared of losing work, so they hold on their money by not spending – and the entire cycle of downturn begins again.
In order to combat this, there needs to be a different economic approach. It is common to think of the Indian economy (or any other economy, for that matter) as a method of selling and buying goods and services – however, an economy is more than that. In reality, it is the methods of taking the resources you have and converting them into the things you need for living. The change in this mindset alone will allow you to see more opportunities that allow you to reduce the misery you are living in.
Why is the economy important?
The important part of understanding the response to COVID-19 understands what makes the economy essential. The current structure is that the global economy exists so as to facilitate the exchange of money, which is why we have ‘exchange value’.
The COVID-19 exposes this thinking, as it has made it difficult to earn money from essential services, and it is exposing that many are working in non-essential jobs.
The change it is bringing as a result of this exposure gives hope, because it hints at the chances of having long term changes by adjusting our mindsets. Whether you are an employee or running your own business, you need to be prepared for these changes.
One of the Indian entrepreneurs, Pravin Shah, thinks that this is a tough time for all the businesses, be it small or big, but what makes more sense is to take it as an opportunity and create the best out of it. If you don’t have an online business, this could be the right time to take it online to enhance your business. You can provide service to people through digital mediums and keep your economy in line.
Conclusion
While it is true that the scenarios above in the global economy sound like you have cause for fear, there is always hope. The pandemic has done a good job of exposing the weaknesses our economies operate in, and it will take drastic changes to re-organizing ourselves to build a more humane future
