How the Covid-19 Pandemic Affects our Transition to a Sustainable Economy
Covid-19 pandemic spreading at an alarming speed brought the economies to a near-standstill. The Globe started breathing with the same priorities at once:
- To soften the pandemic’s health and economic consequences
- To protect the vulnerable population
- Set a platform for long-lasting recovery
Our nature pursues balance and prosperity where the well-being of people is becoming more vital. The governments needed to issue emergency stimulus packages to mitigate the negative effects of the Covid-19 lockdown.
Counterfactual real GDP projections 2020 Q1- 2021 Q4
How Covid-19 will change the world?
What big changes happened and which sectors have truly absorbed the shocks? The energy sector faced the first shocks as the demand for energy fell due to travel restrictions and stop in passenger flights. Stay-home rules also cut down electricity demand.
The Asian Development Bank forecast that the COVID-19 pandemic could cost the global economy in the range of US$5.8 — US$8.8 trillion, or 6.4–9.70% of global GDP. Global employment could be contracted by 158 to 242 million jobs.
4 Lessons Covid-19 taught us
Key aspects the Coronavirus pandemic revealed as emerging:
- Resilience of economies. While the healthcare system underwent the true challenges and human lives faced the critical shortages of medical care, the lessons we all learned is better planning: to anticipate scenarios, to get prepared, to cope, and adapt. World trade could drop as much as 15% in 2020 due to the sharp fall in global demand and disruptions in the established global supply chains. The next challenge can be global warming, for example, and temperature increase. Are we well prepared for that?
- Public sector is vital. Stimulus packages and economic boost programs around the world could somehow keep individuals and businesses afloat and ready to grow their sector upon the end of the pandemic. As the governments issue stimulus packages, they are more concerned to throw more money into the green economy and clean energy. The public sector needs to change. The public sector can make up to 50% of the economy in Europe.
- Social Security comes first. Covid-19 pandemic magnified the flaws of inequality, where the poor are hit the hardest and service sector or frontline workers are the most vulnerable to the virus and its negative economic impact. The evidence-based policy tools and sector priorities can provide the foundations with effective, sustainable, and inclusive COVID-19 recovery plans.
- Green Policies: Green energy structural transformation will take another 5 to 10 years. That is to say, the short term fiscal stimulus packages will lead to long-term commitment and public spending. Instead of fueling large amounts of money to bail out the affected sectors, governments and large financial corporations started supporting renewable energy sectors, fossil, and bioenergy programs. Such steps are preparing the economies for the next level of accelerated growth.
How will Sustainable Development affect us?
Well, if we want to build a cost-saving economy model, then we need a strategy. Perhaps pricing reforms by the governments to back clean energy or setting certain requirements to retrofit old buildings. Businesses can further be required to reduce emissions or commit to recycling waste.
Digitalization of work
My daily activities starting from simple mobility needs to travel will undergo changes. Behavioral change helps people to avoid increased health risks while taking their work home. Looks like everything goes online and fits into my single laptop: work, business, commerce, health, education, culture, entertainment, and leisure.
A large number of countries, especially those of emerging countries or dependent on oil prices already see moderately higher inflation. On the other hand, during the pandemic, the dependence on cashless transactions increased. I think it’s high time for the public sector to lead by example and integrate financial and non-financial performance. I expect the world will become less globalized and countries will close up to satisfy their local supply chains.
Health risk concerns may as well reduce long-distance flights even after overcoming Covid-19. Reduction of air travel creates room for new alternatives and transport modes. Electrical vehicles are becoming the next breakthrough in the leading economies. Charging infrastructure and eBikes will also bring new trends into our daily lives. Hyperloops will replace long-haul flights and commercial aviation in the future.
Cloud services, Internet of Things (IoT), data security are the spheres related to remote working and will definitely see a rise during this sluggish period. Next comes health, safety, and wellbeing, so I keep thinking about what will be in huge demand. My hint is natural ingredients, nutrition, anything good for the immune system. Personal diagnostics and telemedicine
Awareness of system-level risks becomes more essential as they cause personal exposure. Supply chain vulnerabilities lead to management risk and cutting of spreads. New requirements referring to workspace safety stress the importance of reskilling the labor force for a smooth transition towards automation. Companies able to leverage digital toolkit become more resilient and better prepared for the transition to the sustainable and post-pandemic economy.
Can we use the pandemic to achieve the global goals of sustainable development? I do believe with the right and informed decisions it’ll become possible to transform the long-term impact into a positive outcome. As the famous quote by Winston Churchill says — “Never let a good crisis go to waste.”