Economics: COVID-19 Pandemic - What Doesn`t Kill Us.......

(Drivebycuriosity) - The world is still in a recession caused by the COVID-19 pandemic, lockdowns and social distancing. But the crisis, as challenging it is, reminds me of Friedrich Nietzsche`s claim: "What doesn`t kill us, will make us stronger". I believe that the global economy will recover stronger than it was before.

History shows that consumer and businesses are more willing to change behavior during setbacks (twitter). The Spanish flu from 1919-19 was followed by the "Roaring Twenties". After the pandemic had ended an economic boom started and ran from 1919 till 1929 which led let to significant changes in lifestyle and culture (yardeni).  These "roaring twenties" were turbocharged by a technological revolution which changed the whole world. Then sharply falling costs & prices led to explosive sales growth of cars & radios. A lot of other things, including telephones, refrigerators, electric washing-machines, cosmetics, rayon (a synthetic fiber used for stockings & lingery instead of silk & wool) and many more goods also became much cheaper and available for the masses.

 

The COVID-19 pandemic could spur a similar wave of innovations. Innovations typically gain traction during tumultuous times. Companies are forced to streamline operations and to get more efficient, creative & productive. They need to get faster and their products & services are becoming cheaper and more convenient. These changes are accelerating the ongoing digitization process, using Internet and other software applications more intensely. The Ceo of Bill.com, an online service, said: "We believe the ongoing pandemic has accelerated the need for businesses to focus on digital transformation” (seekingalpha).

 

And the consumers are responding to the crisis and are changing their behavior as well. People who were forced to stay at home - or leave it less often because of infection risks - are using the internet more intense for work, shopping, education and leisure. This way the virus is boosting the digitization process, which is fostering productivity growth across all industries, leading to more  economic growth (driveby). Microsoft`s CEO Satya Nadella said “two years of digital transformation took place in two months” ( microsoft ) .

  

Alibaba`s CEO Daniel Zhang claims that the pandemic and her forces of change create opportunities ( seekingalpha). "We have observed more and more consumers getting comfortable with taking care of their daily living needs and working requirements through digital means...Many, many consumers they change their way of living and for many offices many workers they change the way of how to work. So people now work remotely from home. People buy foods, buy fresh products, buy groceries, buy necessities from home". Zhang declares that "after all is done, I would expect that this is an inevitable trend that more and more business and more and more customers will have a digital life or digital working style. So this obviously will -- in the long-term will be good for the digital pace of the whole society".

 

Companies that are specializing in online services, like e-commerce, cloud computing, online-education, payments, video-conferences and more, are experiencing a boom which is making them much stronger. They are now amassing a lot of cash which they invest in their infrastructure which will be the yeast of the economic growth.

I assume that the digitization process, which is obviously spurred by the corona epidemic, will make the global economy more modern, more efficient and more productive which will boost economic growth in the coming years (reuters).