The world seems to be changing permanently. COVID-19 is bigger than 9/11 or 2008 global financial crisis. World living population hasn't seen such a catastrophe. It is a health crisis and has long-lasting physiological and economic implications. Global financial markets are demonstrating it. It is fueling hatred against ethnicities and sects.
This may well be the beginning of an end to the globalization of manufacturing. The services flow across the borders may not be as adversely impacted.
The spread of a pandemic will bring a new kind of risk mitigation measures in the world. The travel is going to be most affected even after the fear of COVID-19 subsides. The anti-globalization spree started a few years ago will only increase now. Donald Trump came with a promise to bring jobs back in the US. Brexit is in resentment of native Brits against foreign workers. The mantra will spread like pandemic. Many countries will reassess their risks and may add health-related travel barriers. Since the virus started from China, Western countries may reduce their dependence on Chinese manufacturing and tourism.
There will be losers and winners in this game. In the start everyone is a loser. But once the air is clear, technology dependent businesses will spur and localization and automation of physical manufacturing may increase. Aviation industry will be affected the most. World travel is reduced by 80 percent and this may not revive to its peak level in foreseeable future. Tourism dependent economies will have more repercussions. Many hotel and other hospitality businesses may file bankruptcies.
Healthcare and pharma businesses may thrive. The developed world may introspect on the benefits of spending on war deterrence versus that on improving healthcare systems. Education may face a paradigm shift too. Distant and online learning may increase. Invariably, this is the future, now this may expedite. Many economies are relying on foreign students' induction. This model may shift to distance learning. The conventional school system for kids may change too. Already, schools are expediting distant learning systems.
Online shopping may speed up further. Businesses like Amazon will be the winners. Online food delivery will thrive further. That may keep restaurant businesses afloat. The entertainment industry will shift online. Outdoor sports commercial activities will reduce and it is best time to invest in online gaming businesses. Already it is coming in competition to conventional sports events. The cinema industry is to be affected and companies like Netflix will thrive more.
The whole world order is shifting. The energy industry will experience a greater shift. One positive coming out of COVID-19 spread is global warming. The biggest contributor to carbon emission is air and ship transportation. The oil industry is going to shift. The oil war is likely to continue and one may not see oil coming back to $60 per barrel. This will have implications on geopolitics.
China thrived on being a global factory. This could be a history soon. The global supply chain disruption in risk of any future pandemic will force developed countries to look inward for manufacturing. US businesses are already showing nationalist signs towards over-reliance on China. They may look to diversify the portfolios soon. The investment in automation in manufacturing to speed up. Artificial Intelligence may become common earlier than anticipated.
The best outcome out of this crisis would be increased focus on healthcare system. More voices are resonating on negative externality of spending on nuclear deterrence and other arms on healthcare. This holds true for superpowers like the US and military power like Pakistan. The worst of this pandemic is yet to come. Laws of probabilities say that it will eventually hit you and me. The virus is not discriminating between rich and poor, developed or third world countries. It is a wakeup call for the world to prioritize healthcare.