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Post-pandemic Economic Dynamics

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Dr. Muhammad Shahid

Nobody knows when the Covid-19 will end. The virus has gripped one country after another. It was a wonderful feeling to go back to normal life after experiencing Covid-19 restrictions. When we start thinking that corona virus has been beaten, a new variant struck. This is now for almost two years and Omicron is the latest variant spreading faster than the previous Delta variants.

The time to say goodbye to corona virus has not reached yet. But one thing is sure, the post-Covid life is significantly different. A new way of life is emerging because the Covid-19 left behind a very different world. There will be some painful adjustments as well.

This is not the first time that a pandemic has changed the world. Talking historically, crisis revolutionized and changed societies. Health crisis, pandemic and economic crisis changed the behavior of people in the past. These crisis fueled technological advancement and kick started economic, political and social changes in the past. For instance, in the 14th century the Black Death plagued the Europe and caused devastation. Governments in Europe introduced very brutal restrictions, lockdowns and adopted different approaches to social distancing to stop the spread of diseases in their communities. Infected people were locked up in confined spaces to die. The health cost was very high and about a third of Europe population died from the plague. The positive sides of these devastative crisis were the emergence of the new inventions and innovations. For example, having few workers encouraged the development of new technologies. There was a shortage of labour which led to the development of labour saving devices. Soon it was realized that these labor saving devices and machines could do it more easily and cheaply.

Flu pandemic of 1918 was another historical and horrific health crisis.  The flu pandemic looked surprisingly similar to what we have experienced today due to Covid-19. Educational institutions, offices, markets, businesses and theatres were shuttered.  There were mask mandates and anti-mask protests back in 1918 and same is the case today. The health cost was too high and about 100 million people died from the flu pandemic, more than triple the number that died in WW1. The flu pandemic hit as the WW1 was ending. Both the WW1 and flu pandemic crisis ignited change. For instance, if you look at the first war, the men went to the battle fields and women had to work in factories. Women took on a lot of jobs that they had previously not been able to do. Perceptions changed and there was a paradigm shift in thinking about the changing women’s role. After the pandemic ended, businesses were inspired to take more risks. The number of startups in America boomed after the 1919 pandemic.  

We can examine and investigate these historical changes in hindsight.  With the technological developments today, it is possible to quantify changes as it is happening. The amazing thing which make this Covid-19 pandemic different from the early pandemics is the amount of data we have.  We know the fact that we are all walking around with smart phones like computers in our pockets. We have got the unprecedented amount of data, obviously more data than we can deal with. The immense amount of data availability allowed the data journalist James who crunched the data and created an index for normality.  The index basically examine the change in behavior in different countries. The idea behind the normalcy index was to track how things have changed during pandemic and how behavior might persist beyond the pandemic.

The world before the pandemic is a history. The new way of life would be quite different and may depend on changed social, economic and political dynamics in different countries. We need to address challenges created by the new normal. Finding answers to questions like to what extent things are going to recuperate. We are not going to snap back all the ways and regain the same past.  People are not going to do the things back they did before the pandemic.

We also need to find the answer to question like what makes the world so unpredictable. No doubt we are entering into a hybrid world where people do things online as well as offline. This has been a pretty big change for most people. Government placed tough restrictions in the beginning and then went for smart lockdowns. New fields like e-commerce and online shopping are emerging and altering people’s behavior. Online shopping in Pakistan was not so common before the pandemic. People were used to buy things in person mostly because they considered shopping personally as a social experience. A visible change in the behavior occurred and a different story emerged during the pandemic. Millions of people experienced online shopping during the lockdowns. Today, despite restrictions being lifted, the amount of people shopping online are gradually increasing. The addiction with online shopping is increasing because people are realizing that the can buy all kind of stuff with few clicks.

Our new online lifestyle goes beyond shopping. The prominent and biggest long time changes from the pandemic is the possibility of more people working from home. Data indicates that office occupancy is rising but it probably wouldn’t ever rise to pre pandemic levels. Companies will allow people to work from home. Online companies are hiring people around the world.

Calculating the ravages of Covid-19 pandemic is not easy. We have still a long way to go to accurately assess the full impact of the pandemic. We will only be able to assess it once it’s over. But this is now for sure that coming of automation and digital technology would upend the work force. Excessive automation is de-skilling and reshaping jobs, altering how and where work is done. It is encouraging and feel good to see surge in people’s interest in statistics. Legislators and economic managers should use data to chart the social and economic changes and ensure a policy shift to address the challenges of recovery accordingly. But one thing is sure and data supported that the world is never going to be the same again. 

The author has a PhD degree in Economics from PIDE and working as research officer in the Economic Advisory Wing.

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