COVID-19: 10 ways it may change the world - part 1

Posted by MIRA Funds

May 7, 2020


As governments around the world rush to eradicate the COVID-19 virus, measures introduced to fight the disease may alter our way of life permanently. We asked Daniel McCormack, MIRA’s Economist, for his thoughts on the potential impacts of COVID-19.

1. Autarky

The crisis may lead to a much greater focus by governments on national self-reliance when it comes to food, energy, medical supplies and manufacturing capacity.  The greater emphasis on local manufacturing capability could mean that 3D printing garners more attention and possibly receives government support.


2. Trade and technology barriers may rise

The greater focus on national self-sufficiency and the urge to protect jobs could see trade and technology barriers increase. This may be particularly pronounced between the US and China; but is likely to be a global trend. Tariff levels could go up and governments become much more involved in technology with some of it brought ‘in-house’. There is likely to be an increased focus on engagement and collaboration with technology companies, which could result in greater regulation of technology and a view that technology should be used in the national interest.


3. Headwinds for air travel

Air travel could be slow to rebound as lingering health concerns weigh on demand. The increased use of teleconferencing in place of face-to-face meetings may also mean that growth in business travel is weaker than it was in the past.


4. Increase in private transportation

Particularly private car travel, both as a substitute for air travel and public transportation because of ongoing health concerns.


5. Automation and robotics development may accelerate

There could be an increased focus on automation and robotics given the use of human labour is now perceived to be less reliable.


“The greater focus on national self-sufficiency and the urge to protect jobs could see trade and technology barriers increase. This may be particularly pronounced between the US and China; but is likely to be a global trend.”

 

Daniel McCormack, Macquarie Infrastructure and Real Assets Economist


6. Increase in working (and playing) at home

With the technology ‘proven’, and people now more comfortable with teleconferencing and working from home applications, a greater number of people may spend less time in the office and more at home. The use of home entertainment could also increase. Demand for bandwidth, network capacity, security software, and AR/VR could grow rapidly.


7. The shift to ecommerce accelerates further

With the crisis having required many to shop online for the first time, more consumers have now set up accounts and payment mechanisms and subscribed to premium delivery services. In addition, comfort levels with online shopping may have increased. All this could lead to a step change in online shopping use and continued rapid growth from there. Online payment services would also benefit.


8. Health apps proliferate

Demand for and supply of apps for health tracking may increase. In some places governments could try to make adoption of some applications and monitoring systems mandatory.


9. Increase in government surveillance monitoring

This could occur at key transport hubs, for essential services/key infrastructure, but also in general as public resistance to such measures is weakened by the crisis. This may provoke a privacy backlash in some areas.


10. Public sector ownership rises

Whether courtesy of taking direct stakes in industries that are bailed out (such as airlines), or as a legacy of the government guarantee programs, or due to the push toward autarky, the state could potentially come out of the crisis owning significant parts of the private sector.

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