Every economic shock leaves a legacy. The deadly coronavirus will be no different.
The Great Depression spurred a ‘waste not want not’ attitude that defined consumer patterns for decades. Hyperinflation in the Weimar Republic still haunts German policy.
The Asia financial crisis left the region hording the world’s biggest collection of foreign exchange. More recently, the 2008 global financial crisis drove a wedge through mature democracies that still reverberates, with workers suffering measly pay gains in the decade since.
This time it’s a public health emergency that’s shaking up the world economy. In just a matter of weeks, people in affected areas have become accustomed to wearing masks, stocking up on essentials, canceling social and business gatherings, scrapping travel plans and working from home. Even countries with relatively few cases are taking many of those precautions.
Traces of such habits will endure long after the virus lock downs ease, acting as a brake on demand. On the supply side, international manufacturers are being forced to rethink where to buy and produce their goods — accelerating a shift after the U.S.-China trade war exposed the risks of relying on one source for components.
In the white-collar world, workplaces have amped up options for teleworking and staggered shifts — ushering in a new era where work from home is an increasing part of people’s regular schedule.
“Once effective work-from-home policies are established, they are likely to stick,” said Karen Harris, managing director of consultancy Bain’s Macro Trends Group in New York.
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SOURCE: Bloomberg, Enda Curran