Predicting life and business when future is so Covid-dependent
We live in extraordinary times. Some say ‘’End Times’’. American radio broadcaster and evangelist Harold Camping, a doomsday preacher who broadcast to a wide cluster of markets in the USA, many times ominously forewarned the ‘End Times’. The doomsday prophet periodically caused a flurry of buying and selling in the stock market. Accepting this as a fait accompli, many naïve believers withdrew their children from school, sold their assets and went on a permanent reclusive-style holiday. Sitting far away from home, they dolefully waited for the prophesized five months of fire, brimstone and plagues on Earth.
The pandemic has created many Harold Campers, such as the near-realisation of prophecy of Sylvia Browne, whose eponymous book “End of Days: Predictions and Prophecies about the End of the World” became a chart buster in Amazon. The plague of prophets warning that the coronavirus is a sign we’re at the “end of days.” There is something about pandemics that causes panicked people to empty their minds along with supermarket shelves. Now, the vaccine and the monoclonal antibody therapy have come across as life saviours.
Simon Dien says, ”One way of finding meaning in this is through apocalyptic narratives. We differentiate between religious (based upon eschatology) and secular apocalypticism (based upon radical political and economic change) and argue that both are to be found in the wake of Covid-19 infection.” For religious believers, the apocalypse signifies the rapture of the faithful into heaven while those on earth will undergo the tribulations. For secular believers, the apocalypse signifies sociopolitical change.
Pandemics indicate the fragility of life and the world, chaos, engender paralysing anxiety that the world is dissolving, a sense of detachment and raise significant issues of meaning resulting in existential crises. Self-isolation and quarantine create a sense of being separated from the community and world generally—a sense of anomie. This was summed up well over two thousand years ago by the Roman poet Virgil’s notion of a ‘maze of dread’: ‘The world itself seems entirely unreliable: not only dangerous but also deceptive. The appearance of being a safe and thriving land becomes only a façade that hides the threat of death.’ As Katherine Schwetz states: ‘’Pandemics scare us partly because they transform other, less concrete, fears about globalisation, cultural change, and community identity into tangible threats.’’
If the vaccine and virus have spread unevenly across geographies so as the economic growth and stimulus packages various governments conceived. As the world economy is poised to stage its post-recession recovery the rebound is expected to be uneven across geographies — major economies look set to register sound growth while small economies lag. Since the majority of the investors face their portfolios painted in red ink the old hag investment strategies have been turned on their head. Many myths are busted, case scenarios revised, and paradigms shifted.
Some earlier market studies in China in 2020 found health care, information technology and telecommunication services sectors were found to be relatively more pandemic-resistant. Then the world appallingly witnessed some of these sectors were in a free fall. No plans seemed to be impervious to the highly transmissible corona.
Even the manufacturing of Covid-19 vaccine does not seem to be lucrative, as scores of variants forced vaccines to the drawing board to start all over again. RNA based vaccines such as Pfizer and Modena, which claimed that it was easy to tweak their formulae to produce antibodies to fight off new variants, now see Omicron as a different animal. Further, these manufacturers are subjected to state regulation, the latter has its string attached vaccine nationalism or the vaccine alliances such as COVAX, a worldwide initiative aimed at equitable access to COVID-19 vaccines directed by Gavi, the Coalition for Epidemic Preparedness Innovations (CEPI), and the WHO.
It seems no one is in control of his or her destiny. Our interconnectedness and interdependencies does not seem to be our strength any more. If vaccine philosophy proclaims the vindicated truth, ‘’No one is safe, until everyone is safe’’, it is not absurd to say, ‘’No economy is safe until all economies are safe’’. This is about our shared fate on the planet and learning to co-exist in the space of business and economy.
No one has effectively predicted how the virus will mutate – it flummoxed everyone from Anthony Fauci to TedrosAdhanom — even though we have been dealing with this phenomenon for nearly a century. The recent Covid 19 (including all its variants from Alpha to Omicron) is merely one form of Corona virus from a large family of viruses. The earliest reports of a coronavirus infection in animals occurred in the late 1920s, when an acute respiratory infection of domesticated chickens was found in North America.
During this volatile time, may be PWC prepared guidelines on how to navigate in COVID-19 landscape can serve as a template. This focuses on crisis management and response, workforce, operations and supply chain, financial reporting, tax and trade, and strategy and brand.
Most organisations already have business continuity plans, but COVID-19 remains elusive. Archetypal contingency plans warrant operational effectiveness following events like natural disasters, cyber incidents and power outages, among others. However, they rarely take into account the widespread quarantines, gridlock-style lockdowns, extended school closures and draconian travel restrictions during health epidemics.
McKinsey perspectives on the frequent coronavirus outbreaks underscore the twin threats to lives and livelihoods, and how organisations can prepare for the next normal. For example, as a corollary to its supply chain management findings, it purports, ”companies are more likely than expected to increase inventories, and less likely either to diversify supply bases or to implement nearshoring or regionalization strategies.”
As the world beset with continuous outbreaks and mutating viruses, the economies wobble despite having found its foot on the door of recovery many times. Even though some of the businesses manage to reinstate themselves, the recovery appears to be more fortuitous than by design. The consequential unexpected occurrences of supply- and demand-side shocks forced the economies to pare down their growth prospects. The interplay of these shocks has caused spirals of downturns in all major economic sectors, including the financial sector in affected countries.
Market reactions to the outbreak and authority responses information are more momentous in developed economies due to their better information efficiency compared to emerging economies. The country-specific features of globalisation, contingencies, healthcare system readiness, and economic development levels appear to have massive influences on equity market reactions.
Financial markets in countries with higher levels of globalisation, economic policy and financial precariousness experience more disruptions during the pandemic due to the complexities of their economy. The poor economies have other challenges such as meeting the minimum conditions of business survival to dealing with crumbling healthcare systems.
The pandemic is expected to throw more and more nations at the deep end, with per capita income contracting in the largest fraction of countries globally since 1870, the World Bank forewarned. Advanced economies are projected to shrink further. And the historic contraction of this per capita income will spill over to the outlook for emerging markets and developing economies as they clumsily cope with their own domestic outbreaks of the virus.
The existential crisis of the world underscores the need for swift action to cushion the pandemic’s health and economic consequences, protect vulnerable populations in Africa and elsewhere, and pave the way for a lasting recovery. For emerging markets and developing countries, many of which face dismaying unprecedented challenges, it is overridingly fundamental to bolster public health systems, address the challenges posed by long-pending reforms that will support sustainable growth once the Covid loses its sting.
By Sarat C. Das