Some crises are clear turning points in history, disruptions like the Black Death of the 1300s or the Great Depression of the 1930s, where everything before is swept aside and a new order emerges. The coronavirus pandemic is not one of those times, argues Guillen. It will just intensify and accelerate—rather than create—a series of interrelated trends. His
advice for CEOs: “If you weren’t doing enough before the crisis to catch up with some of these, you’re going to have to run faster.”
Emerging economies truly emerge. According to the IMF, emerging economies this year are projected to grow by about 2 percent. That’s paltry, yet the U.S. should have -5 percent GDP, Europe, -7 percent. “Asia is worse off than it was before the pandemic, but they’re going to keep growing, whereas we’ll just be shrinking in economic size,” Guillen says. “So, that’s only going to accelerate their rebalancing of geopolitics in the world based on the size of economies.”
Smaller families reshape markets—and nations. People usually postpone major decisions when faced with uncertainty. Having a baby is a huge financial commitment, and a recession will force many to reconsider whether the timing is right. In addition, the virus will reduce immigration, especially to the U.S. and Europe, further slowing birth rates in these regions, impacting everything from consumer spending to stressing social safety nets, like Social Security and Medicare. “On both counts, we’re going to see an intensification of that trend,” says Guillen.
Online wins the customer. Social distancing and “sheltering in place” are already intensifying shifts toward online shopping, virtual communication and digital entertainment. That will increase, and it will not be reversed. Banks, for example, are already seeing an unprecedented acceleration away from physical branches, with knock-on impacts for finance, real estate and the labor market. “This is a big experiment, and people have been forced to use the online channel given this crisis. And the learning, the experience, that is going to stay with them forever.”
Large-scale automation happens. Covid-19 is providing the manufacturing, service and transportation sectors more incentives to automate than ever. The risk of disrupted operations and supply chains due to illness will tip the scales on the costs of conversion.
“Inevitably, some people will lose their jobs, and you know who they are,” says Guillen. “They tend to be people in their 50s with skills that are not really employable. They can’t find jobs. That contributes to economic inequality.”
Generational divides expand. With Europe and East Asia composed of an older age cohort and Africa and South Asia experiencing a baby boom, the share of the world’s population moving to the latter will only accelerate if the Covid mortality rate among the old continues at the pace we are witnessing, with financial and other impacts.
Income inequality and health. The working poor and the homeless are unlikely to have access to good healthcare, and their immune systems may already be compromised due to poor diets or insalubrious living conditions. While the virus won’t discriminate by income or healthcare coverage, people at the bottom of the socioeconomic pyramid are far more exposed to the consequences of infection. This will have longterm, perhaps multigenerational, consequences.
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