The story of Covid-19: How people, government and corporates reacted to the threat of Coronavirus
Covid-19 has changed to trajectory of economic growth around the globe. Within months of first patient recorded in Wuhan, China, the coronavirus has spread to 75+ countries and infected over 630k individuals (as on 30 Mar 2020). This high rate of infection and death have prompted significant changes from people, governments and corporates. The variety of behavioural and policy changes are focused on alleviation of damage done by Covid-19 and pre-empt further negative impact.
People’s reaction was the first deciding factor against Covid-19. Since the news cycles started raising alarms on the spread of Covid-19, three key responses emerged that have swayed public opinion, spread of infections and measures for course correction.
1) Perceived risk from Covid-19: While coronavirus itself is novel, its symptoms are similar to common flu. The initial response to coronavirus was quite tamed outside of China in the early months (Jan-Feb 2020). As the disease spreads around the world, the severity of the matter is becoming more blatantly obvious. Ipsos Mori’s survey paints a picture of changing perception of vulnerability. Only 26% of people in the UK, 31% in Germany and 34% people in Italy believe that the Coronavirus poses a serious (high or very high) level of threat to their country.
2) It is SARS all over again: First patient was detected in Nov in China. By Mar, the disease had spread to over 30 countries. The death rate of the virus was as high as 10%. These statistics are not from Covid-19 but SARS infection in 2003. SARS was a deadly infection that led to severe but short-term negative impact on global economy. Public perception is changing, but continues to underestimate the potential impact of Covid-19, which has a much higher transmission rate than SARS and had already surpassed it in both number of deaths and infected people.
3) Panic buying: As countries promote lock downs, self-isolation, work from home and social distancing, people are taking drastic steps to prepare themselves for weeks or even months of homestay. People in many countries have started hoarding or stockpiling essentials such as food items and toilet paper. The Economists would remind us that the inventory costs of stockpiling toilet paper are too high and it creates unnecessary distress on rather steady supply chains. However, the sight of scarcity – of seeing empty shelves – has spurred the (mostly) unwarranted shopping spree for essential goods. This panic-buying affects us all negatively in three key ways – 1) it increases interactions with other people and hence exposure to coronavirus. 2) It creates a bull-whip effect for supply chains and strains them in near future; and lastly. 3) It elevates anxiety for everyone.
One of the latest survey by Ipsos Mori shows that while 61% of Britons believe stockpiling is not ideal, in these circumstances, almost 1 in 5 people believe in stockpiling of essential goods including personal hygiene products, food items and medicines. 14% of the Britons think it is acceptable to buy large quantities of toilet paper at the moment.
Most countries have taken aggressive measures to curb the infection. The medical and scientific community has strongly recommended isolation and social distancing as best ways to slowdown the spread of Covid-19. The now-famous flatten the curve is urging governments to create policies for limiting social interactions. Governments have also taken significant steps to limit the financial impact.
It is vital for governments to estimate the potential outcomes of coronavirus, time it will take to resolve this crisis and the total damage on both global and country level. Morning Star’s projections show that in the extreme case (where the infection spreads exponentially and undeterred), it can lead to a fatality of up to 0.2% of the world population. This could have an economic impact of wiping out 5% of the GDP in the short term (2020). In their most optimistic scenario, the fatality rate would be 0.01% and the GDP decline of 0.10% for the year 2020.
Will Covid-19 have any long-term impact on consumption and buyer behaviour? Most experts’ opinion is that this will have a short-term impact with no long-term influence on the economy. However, that may change based on how consumer’s behaviour evolves in response to this crisis. The three recovery scenarios offered by BCG in this HBR article are:
1) V-shaped: This scenario anticipates that there will only be a displacement of output. However, the economy will recover fully. The economic impact will be negligible in long-term. This scenario does not anticipate structural changes either in economy or behaviour.
2) U-shaped: In this less optimistic version of the V-shaped scenario, the markets suffer a permanent decline in output. This could extend the bearish outlook towards markets.
3) L-shaped: In this worst-case scenario, the Covid-19 pandemic has long term negative impact on all functions of economy including productivity, capital and labour. Though this scenario is least likely, it offers a grim picture of vulnerability of global supply chains and economies to a crisis on such a scale.
Government action for mitigation
China was the first to declare lock-downs and preventive steps to limit the transmission of coronavirus. The variety of responses from several countries can be a range from almost no-action (in early days) to full lock down with patient tracing and monitoring.
Countries that had an early exposure to Covid-19 (China, Japan and South Korea) had initial exponential rate of transmission. This strained their medical facilities and treatment capabilities. The nature of the virus and its treatment were also less known, which led to confusion, delays and lack of a strong policy. However, as the numbers started to climb further, these early exposed countries managed to quarantine infected people and limit the further transmission of coronavirus. In past weeks, these countries have been able to slow down the further spread of
Later exposed countries include the worst-hit (Italy, Spain and US) and all the other countries who face the same degree of threat but have been able to manage the number of infected people. The course of action taken by governments in the worst hit countries includes lock-down, emergency evacuation, dedicated treatment facilities and foreign aid. However, the rate of transmission is still out-numbering
Globally, common policies implemented by governments include lock-downs, social distancing, work from home, closure of non-essential shops and venues. The anticipated period for these mitigation measures range from 3-12 weeks. In some countries these lock-downs are enforced by law with police and/or armed forces patrolling the streets. (Data from: Time magazine as on 30 Mar 2020)
|Ranked by # of infections||Countries||Cases||Recovery||Recovery Rate||Deaths||Death Rate|
Government action for diagnosis and treatment
There is no known treatment for the strain of coronavirus (SARS-CoV-2) that causes Covid-19 disease. There are a few drugs that have shown promise and are being tested.
The worst hit countries’ are dealing with severe strains on both upstream (transmission, fatality rates, reporting) as well as downstream issues (access to drugs, test kits, safeguarding medial professionals, hospital beds and medical infrastructure).
Governments have called for emergency, lock down and closure of business activities. Several countries have mobilised their armed forces to supplement the medical infrastructure available to their residents.
Governments have extensively sharing their resources and knowledge around the growing pandemic to manage its severe repercussions. Two of the most critical product requirements during treatment of patients are diagnosis kits and ventilators. The medical supplies are depleted quickly and alternatives are being tested.
Collaboration between governments and corporate institutions are conducive to find treatments, support infrastructure and managing chaos.
Government action for recovery
While the emphasis is on reducing the damage done by Covid-19, a forward-looking plan for economic recovery is needed. Some of steps are already taken in this direction. Some of the attempts taken in that direction include –
- Stimulus package
- Financial support for businesses
- Salary protection
- One-time payment to people/ business
- Reduced interest rates
- Nationalisation/ Govt. support for hospitals for treatment of coronavirus patients
- Purchase of ETFs, corporate bonds
- Food security, delivery for elderly, managed supply chains and bulk orders for essentials
Tackling the threats posed by Covid-19 requires collective effort. Fortunately, corporate sector have stepped up to shoulder the responsibility. This includes workplace policies such as allowing work from home, offering financial support to employees, providing space and safe work environments. Many companies have chosen to direct their existing capabilities for mitigation effort such as re-purposed their manufacturing plants for producing medical and personal hygiene products. Lastly, the dedicated pharmaceuticals are focusing their both finding a cure and producing medication that can help in treatment of the Covid-19 disease.
The most effective response from corporate can be further segmented into the following categories
- Medical assistance for patients (equipment, personnel, facilities): Firms such as
- Precautionary medicine and sanitising products for public use
- Food and essentials distributors & Supply chains
- Food and essentials manufacturers
- Entertainment & Connectivity