The future lies in embracing the new economic normal

BY TAPIWA GOMO

There is no doubt that 2020 was a challenging year and that the impact of the COVID-19 pandemic will be felt in the short and long term.

However, emerging figures are showing us the down and upside of how the economy performed and who were the winners and losers and why as well as the future fears.

The biggest lesson from the pandemic experience, so far, is that every challenge presents opportunities and how society or its members position themselves has lot to do with the losses or gains from chaos.

The pandemic, lockdowns and other measures to curb its spread have had a huge bearing on various streams of the economy.

Lockdowns resulted in reduced production and low or no income for some companies. For workers, it resulted in less or no income which pushed millions of families into destitution. Limited movements saw the transport sector recording huge losses.

The oil industry, already facing stiff pressure from climate change advocacy, suffered historic $77 billion losses in 2020 as the COVID-19 pandemic sent demand and prices tumbling.

Developed economies cushioned their citizens and their industries which minimised the economic impact of the pandemic.

As they say, nothing is for free and someone will have to pay. It is most likely that the resources used to cushion citizens will be recouped from them in the form of taxes.

But who cares if families survived the pandemic, industry was sustained and workers retained their jobs.

That is the beauty of having an industrialised and advanced economy.

Forbes estimates that more than 10 million more people are out of work in the United States of America as a result of the virus and they have only gained back nearly 50 000 jobs in January, a sign of slow recovery.

Globally, the International Labour Organisation (ILO) estimates that approximately 255 million full-time jobs were lost due to the pandemic, with Latin America and the Caribbean, southern Europe and southern Asia being the worst affected.

For informal economies such as Zimbabwe, it is not clear what damage the pandemic caused on the economy but the death toll — mainly of high-profile people suggests that the impact may be higher.

Even with that massive economic toll on ordinary workers and citizens, they were big winners, mainly those who understood that challenges open up new opportunities.

Forbes estimates that the world’s 2 200-plus billionaires increased their income to become nearly $2 trillion richer in 2020 when others were losing their income. While that is cause for celebration, it has an impact on the increasing divide between the rich and poor and widening economic inequality.

Elon Musk was talk of 2020 with his fortune growing from $110 billion to nearly $137 billion, which placed him among the top five richest people in the world.

His fortune is derived from increasing shares in Tesla Motors, which spiked by 630% in 2020.

He took advantage of the slumping oil industry during the pandemic to demonstrate the importance of electric vehicles.

That has put him in a strong position to push his cars on the vehicle market which is controlled and monopolised by the oil industry.

Investors see massive future in electric vehicles and they have upped their share investment into Tesla Motors.

The year 2020 was the second best year for Jeff Bezos — the richest person in the world.

He is now $182 billion richer after a $67,5 billion increase in 2020 as result of a spike in Amazon stock.

Lockdowns meant that most people did their business online. In one of my previous instalments, I noted the potential in online retail trade and that it is one of the deciding factors of business success in the short and medium term.

Shoppers are fast realising that there is no need to visit a shop if they can get what they want online.

Online shopping means reduced risk of contracting COVID-19, eliminating transport hassles and spending more time with loved ones at home.

Growing economic fortunes were not only witnessed in the US but in China as well.

The Nongfu Spring bottled water company took advantage of the COVID-19 campaigns on water and sanitation which saw their fortunes rise to $62,5 billion, up from $2 billion at the start of the year.

A bottle of water and a sanitiser became a necessity since the pandemic started and that is a huge market to be exploited. Another Chinese investor, online shopping Alibaba Group co-founder Jack Ma, saw an increase of $18,9 billion to $61,7 billion in 2020, despite the challenges he faced with the Chinese government.

While these achievements are to be celebrated and emulated, there is a downside to the successes, if there are no strategic approaches to how the pandemic will reconfigure economies – mainly production and consumption.

The rapid rise in online retail and digitisation of trade raises genuine fears of pushing unemployment rates even higher and consigning millions of people to joblessness.

For example, clothing will not require a shop and warehouse but an online platform to market and sell products and an effective delivery system. Office and shop rentals will decrease, so will be the shop floor salespersons. Estimates indicate that, globally, this will take a toll on 85 million private sector jobs by 2025.

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