Uncertainty gives rise to anxiety. Most economic operators have never experienced such acute stress as they have in the past year.
As for next year, research confirms that, despite the prospect of an effective vaccine being widely available in the first part of 2021, few believe this will be a silver bullet. It is unrealistic to expect the economy to be booming again anytime soon.
So how best to manage the acute economic uncertainty of the intervening period?
A PwC survey found that over half of fashion retailers and restaurants could consider scaling down operations and making employees redundant if the present “stressed” level of business persists.
An EY survey paints a similarly bleak picture, with many bricks and mortar retailers fearing that, this year, the Christmas sales boom will not take off. Retailers who invested in e-commerce are likely to be less badly affected. But if this year’s Black Friday event is any indication – it is meant to draw shoppers in droves but a lot of them stayed away – the overall picture is not good. No one reasonably expects crowded shopping streets this December.
Of course, not everyone has been affected in the same way by COVID. Those employed in the public sector or businesses that have not been so severely impacted by the pandemic have experienced less collateral financial damage.
Other economic activities are not caught on the radar of analysts trying to measure the impact of uncertainty on the economy. For instance, those working in the shadow economy, the arts or the gig economy are hardly represented by business lobbies. Yet, they are an essential element of the working population.
Given that the COVID vaccine inoculation programme will take at least until the middle of 2021 to start instilling a sense of normality in the community, managing the next few months of uncertainty will be a tightrope act. Taking undue medical risks to tide the economy over could in the longer term lead to more economic harm.
Government measures to cushion the worst aspects of the economic downturn are scheduled to come to an end next March. One can reasonably expect that if, by then, the situation is not back to a high degree of normality, the government will have to extend the support schemes for at least another quarter.
The government, the business community and the population, though, will have to start paying for the costs of navigating the COVID disruption. However much the government avoids discussing the way we should start filling the fiscal hole created by COVID, the time will come when we all have to face reality, just like other countries are doing.
It is only fair that the wealthier sectors of society in general and the business community, in particular, are made to carry the bulk of the burden of the rescue operation.
The silver lining of this medical and economic emergency is that it has accelerated a rethink about the business models of many operators. Investment in e-commerce was rather sluggish before the pandemic. It now needs to be accelerated.
Consumer behaviour will inevitably change in other ways. Concerns about health and living more frugal lifestyles are likely to gain in importance in most people’s priorities.
The economic challenges the country was facing pre-COVID will remain and compound the difficulties of recovery post-pandemic. By the middle of next year, for instance, we should know whether the Moneyval decision is favourable. Even if it is, it will take more time than that to regain respectability in the international investment community.
The period ahead calls for a combination of qualities to see us through, among them patience, resilience and innovation.