“Who or what benefitted from COVID-19?”
The biggest beneficiary from the Covid-19 outbreak has been China. The country has been the only major economy to register growth in GDP during 2020 and is on course for significant growth during 2021 as well.
China experienced a short lock-down through most of the country (around 3-weeks outside Wuhan) and hence was able to bounce-back strongly in the second half of 2020. As the rest of the developed world experienced different kinds of shut down for various lengths of time and different extents, China was able to take up the slack in manufacturing and continue and enhance its ability to supply the world with all kinds of products, but in particular, with the equipment necessary for fighting and preventing the spread of Covid – namely face masks and other personal protective equipment (PPE). Since the number of cases in China, after the original outbreak was controlled, remained low to non-existent, China did not need the PPE for its own people, and was able to massively expland exports of these products, taking over the mass market with most of its competitiors in various stages of lock-down and/or supply-chain disruption.
Similarly, when the vaccines came on-stream, China was in the lead position to supply them to the world as it had no internal pressure to provide vaccines to its own population as they were not at an increased risk from the disease, as China closed its borders to all but exceptional arrivals on March 26 2020 and has effectively not re-opened since. All tourist visa applications have been suspended since that date and only family resident permit holders were allowed to re-enter briefly between September and November 2020 and then again from April 2021, but only if they had received the Chinese vaccine. Other countries, notably the European and North American developed economies, had no choice but to prioritise the vaccine distribution to their own people as the numbers of infected patients and deaths soared. The effectiveness of the vaccine at reducing deaths and serious illnesses meant that they had little or no ability to supply vaccines to the rest of the world until most of their own people had received it. The subsequent variations in the virus have pressured these countries to look at a third jab and/or vaccinating young people, rather than exporting, leaving the market wide open for China to dominate.
Unlikely many other countries, the Chinese economy does not rely on foreign tourists for a significant share of its GDP. Shutting the border and banning foreign tourists on March 26 2020 has made little or no difference to the performance of the tourist sector in China. The domestic tourism industry has recovered very quickly from the low-point in the first half of 2020 and is running at around 80% of pre-pandemic levels. Most of the tourist sites have been able to weather the storm relatively comfortably, as has the rest of the Chinese economy, without the need for significant financial stimulus, as has been provided by other developed economies to avoid the mass unemployment and disruption that the long lock-downs would have otherwise caused. As a result, all other developed economies now have a huge burden of increased debt to service and if interest rates rise, as history indicates will happen, then the interest payments will become a huge dead-weight on the future growth and development of those economies. Particularly, the normal approach of raising taxes to fund the government expenditure to repay the interest will be a huge drag on any future growth in those economies, a problem China does not have. The present and future looks extremely bright for China as a result of the Covid effect on their main competitiors, particularly the USA, which has lurched from one crisis and disaster to another through their stop-start handling of the epidemic.
In most developed countries, the approach to handling the epidemic has been to shut-down large parts of the economy for long periods. As a result, people are largely required to work from home, if they can, rather than commuting to work. For families, particularly with younger children, this has been a huge benefit. Typically, with parents working away from home for long parts of the day, the damage to the parent-children relationship is often irrepairable. Paying strangers to care for their children has deep psychological impacts on the children, who can easily assume that they have been neglected and abandoned. The forced reunification of the family will have had huge win-win benefits for everyone. The parents will be far less stressed as a result of not having to commute for long wasted hours every day, they can get up later and go to bed earlier and be more relaxed with their family. The evidence has indicated that people are more productive working from home. They are more focussed and have less distractions from colleagues wanting to chat about what they did at the weekend. Bosses have been pleasantly surprised that far from being out of control as they cannot be seen, the on-line monitoring more than makes up for it, but ultimately it is the outcome that matters. If the employees achieve the targets then that matters more than when they do the work. The flexible working particularly suits new parents, who get to spend quality time with their children. The benefits to society from more children growing up with a better and closer relationships with their parents remains to be seen.
3) Medical products sector/pharmaceutical companies.
These were the obvious winners. The massive increase in demand for PPE, vaccines, ventilators and all the related products and services will have benefitted all these companies and their supply chains. Most of these products are manufactured in China, supporting the increase in Chinese GDP, as indicated above. Many of the products have to be disposed of after one use, increasing the demand. The vaccine research industry as well has benefitted from many governments determination to vaccinate everyone, regularly, and unlimited sums have been poured into finding a cure for this new virus. The scientists will, no doubt, demand ever more money to research into cures for the virus variants and also to prevent infection altogether, rather than just prevent serious complications and fatalities. The future looks increasingly bright for this sector of industry.
4) Online sales vs Offline sales
The switch in people’s spending habits from physically walking into a store and purchasing something to buying on-line from home (or anywhere!) will have been massively accelerated by being forced to stay at home during lockdown. The convenience, flexibility and lack of queues is a huge benefit, which even the most reluctant of ‘switcher’ will have appreciated during the enforced home-isolations. The home-delivery market and the related providers, carriers and couriers will have massively benefitted. It is not yet clear how many people still prefer ‘going out’ to buy things and whether the re-opening of the high street will see a partial or full return to physical shopping, but it is unlikely as the trend away from high streets to on-line shops was clearly established before the pandemic forced most countries to shutdown the high street. Most high street stores were struggling before the pandemic. They are unlikely to ever recover now.
5) People’s bank balances/debt repayment
As a result of staying home longer, people were not spending as much on-line as they did when shopping in physical stores. Presumably this is because they were bored and wandering around the shops and buying things they didn’t actually need was some kind of hobby or therapy for their boredom. Staying at home and shopping on-line, even though far easier, apparently doesn’t give the shopaholics the same pleasure and so they don’t spend as much. Shops, particularly, would take advantage of ‘impulse’ buying, with the strategically-placed items near the check-outs to encourage people to pick up things while queuing. The on-line equivalents do not appear to work as well.
The consequential benefit to people’s savings is therefore obvious. During the lockdown, people have been paying off their debts and building up their savings. All good for their financial situation, but it remains to be seen whether this ‘good behaviour’ will continue now that the shops have re-opened or whether people will revert to their previous bad habits of “buying things they don’t need with money they don’t have”.
6) The planet – less pollution
With less people travelling to and from their work-place, there was less pollution from their vehicles, less oil/electricity/diesel/petrol needed for the public service vehicles. Buying less products means less waste from throwing them away and less raw materials used in their production. Protecting the planet can be achieved much more easily by reducing consumption (and hence waste) and the need to travel than by any other means.
There has been a huge transfer of power during the lockdowns. Governments have forced people to give up many freedoms including freedom to travel, freedom to be vaccinated, freedom to decide where to work, freedom as to how to shop. Not surprisingly, governments have tried to keep these restrictions in place far longer than necessary in order to control huge sections of the economy in ways never before seen in most western countries. The forced nationalisation of huge parts of the private sector have met little or no resistance from the ordinary people – frightened into submission by the scary numbers of people succumbing to the virus around them. Governments will be reluctant to give up this power and people seem reluctant to regain responsibility for their lives, being happy to be supported by state welfare handouts in numbers that would have been unthinkable as little as two years ago. The permanent structural damage to the society and economy as a result of all this government ‘interference’ remains to be seen.
8) Online games/movies
All the on-line game companies have massively benefitted during lockdown owing to the boredom factor. The streaming of movies and other video content will have massively increased to provide entertainment to people with nowhere to go and nothing to do.
9) Psychological support services
But the big sufferers during lockdown – the lonely old and young people – will have massively suffered from increased isolation and the exacerbation of any of the anti-social behavioural characteristics. In the absence of any possible physical contact from anyone – even a handshake or hug has been impossible – the psychological consequences will have been devastating. All of the psychological support and suicide prevention industries will have massively benefitted from the shutdown. Loneliness is the biggest killer in most western countries. The true increase in death rate from suicide as a result of the lockdown will take many years to discover.
Sadly, the massive increase in the death rate caused by Covid has resulted in a massive increase in demand for all the funeral services involved in handling our bodies after death, in whatever way we wish to be treated. Unfortunately, lockdown restrictions often meant that loved ones were unable to properly say goodbye to their deceased relatives and so the boom in funerals was, perhaps, more limited than it might otherwise have been.
11) Zoom/Teams and on-line meeting Apps
As more and more meetings have been conducted on-line, so the software and hardware necessary for this to function has been in massive demand. More and more people working from home can easily keep in touch with their colleagues and bosses using these video Apps. All the education, studying and training throughout schools and universities had to move on-line. Similarly, families, friends and loved ones can also keep in touch this way. Many countries have shut their borders, often with little or no warning, resulting in families, couples and friends being stranded on either side of a border and forced to keep their relationships going on-line. The quality of these services has improved dramatically, but the damage to relationships will have been incalculable. You cannot hug over Skype.
What do you do during enforced lockdown? You make more babies! There is usually a baby-boom during a lockdown. We shall see if this time round there has also been a baby-boom and all the baby support industries will be hoping so after many years of the collapsing birth rate in developed economies.
13) Divorce/domestic abuse
One of the sad facts related to enforced lockdowns is the consequential increase in domestic abuse and divorce that follows. Traditionally, January and September have been known as ‘debt and divorce’ months. Couples spend enforced extra time together over Christmas/New Year and summer holidays resulting in a subsequent jump in divorce on their return to work after these holidays. The debt jump also follows having spent more than they can afford on Christmas presents and summer holidays, and having to pay for them in January and September – although perhaps not so likely this time round. Divorce and abuse counsellors and lawyers will, unfortunately no doubt, be seeing a massive increase in demand for their services now.
14) Home improvements
Sitting at home all day, people are much more likely to notice the problems with their house and now have the time to go and repair/resolve the issues – either themselves through ‘DIY’ or by paying a builder to do the work. Since moving house became impossible, people also decided to extend/improve/renovate their own house and there has been a massive increase in demand for the appropriate services – electricians, plumbers, gas fitters, builders, decorators and painters – they are all in increasingly shorter supply, as are the products needed for the home improvements resulting in an increase in cost of all these materials and services - benefitting the whole supply chain.
In the absence of allowable face-to-face physical contact, more and more people have been buying pets to give them something to hug, something to stroke, someone to talk to. Being forced to stay at home in isolation, animals are able to provide some comfort and company in the absence of human interaction. Pets will also have benefitted from having their owners around more and will have enjoyed not being abandoned for 8-10 hours a day Monday to Friday. It remains to be seen whether there will now be a huge jump in demand for animal shelters to rehouse these pets, no longer needed when people return to ‘normal life’.
During the period immediately before the imposition of the lockdown, people stockpiled food and medicines and other emergency products, causing a massive boom and shortages in these key areas. Since the reimposition of the lockdown is highly likely in many places, even without any warning, so people will have over-stocked on these items to cover the possibility of being stuck without supplies during the next lockdown. All of this massively benefits these stores – most of whom were allowed to remain open during the lockdown.
The Covid empidemic and consequential lockdown has caused the most dramatic and significant change in people’s behaviour in recent memory. As the above list indicates, some people have massively benefitted during this lockdown, but many people have badly suffered as a result. It remains to be seen whether these temporary changes become permanent or people revert to their previous behaviour when the preventive restrictions are fully lifted. Only an extremely optimistic person could believe that nothing will have changed permanently as a result of these enforced disruptions and reconsiderations of what is actually important in people’s lives, which only a major disaster like this can cause.
Let us hope that we can keep the benefits and lose the disadvantages and have a better future for everyone in the post-covid world.