How will COVID-19 impact society in the long run?
As the Coronavirus crisis unfolds, social commentators are making predictions for how the world will change once the pandemic ends. I’m sure you’re also making your own predictions – and we’d really like to hear them. What broad, long-lasting trends do you think we’re about to see?
At the beginning of the Coronavirus crisis, I published a blog post with some casual observations regarding people’s attendance at Sydney Fish Market, Coles and Chatswood and predicting weakness in discretionary retail and positive impacts for non-discretionary retail and food delivery services. What has happened since is of course a massive escalation of the crisis with almost a total lockdown imposed which has had far larger consequences than at least I expected.
Last week, my colleague Amit posted an article on how the Coronavirus could change society and identified the following trends:
- Heightened awareness of touching surfaces and social distancing which, depending on how quickly this awareness fades, can have longer term implications for business where people congregate closely like cinemas, pubs, clubs and, of course, cruises.
- An increase in home cooking at the expense of eating out, both as a result from people being forced to learn to cook at home and from likely tough economic times ahead.
- Renewed faith in government. This will of course depend on how successful each government is in tackling the current crisis.
I would like to add a few further observations and also ask for your feedback about other areas where you can see yourself changing your behaviour long term or where you think others might.
The first one is the education sector and in particular the university sector where I see two major trends that can have long term impact:
- It is no secret that the Australian university sector has become very dependent on foreign students from in particular China and India. In 2019, Australia’s “international student export” value was around $12 billion from China and about $5 billion from India. With the current closures of universities and resulting move to on-line learning, I struggle to see international students being prepared to pay the same kind of fees in the future as in the past as they will become much more open to the possibility to stay at home and enrolling in a virtual class at a university anywhere in the world. I am sure that universities will be able to figure this out and compete with each other in delivering these services. I would be very careful if I was involved in the existing university sector but on the other hand keep a keen eye out for new entrants challenging the established universities as they will have completely different cost structures than traditional universities.
- I also see a decent chance that especially Chinese students look to local universities instead both for cost reasons in a tougher economic environment and for health and safety reasons as international travel will likely be tougher for some time to come.
A second trend I would highlight is the obvious boom in remote working. Many industries, companies and individuals are currently for the first time ever coming to grips with remote working procedures as they are forced to implement working from home policies. The longer the current crisis lasts, the more entrenched and accepted working from home will be and that can have some long-term effects:
- Less demand for CBD office space if a higher portion of workers starts adopting more flexible working practices.
- This in turn could lead to less demand for properties close to city CBD which could have quite significant ramifications for the property market with an evening out of prices and rents geographically.
- An increase in demand for fast and reliable telecom services which should impact the overall telecom sector.
Thirdly, the healthcare sector seems to be coming together in quite a remarkable way during this crisis in the search for medicines to both treat and prevent COVID-19 and healthcare authorities around the world are developing different ways to fast track testing and approval of new treatments and diagnostic devices. There is an old saying in Swedish that translates as “nothing galvanises as a crisis” and to me it seems like the whole healthcare sector is going through this at the moment. I can see this having the following implications:
- Time to market for new medicines and medical devices will likely be faster in the future than today. This probably means less funding needed in total for this sector and shorter product cycles.
- There is potential for further collaboration in research and development through open source channels.
- At the same time, we are likely to see a reversal of the concentration of medical supply chains as each country comes to terms with what can happen if one country like China which controls a very high portion of the back end production of chemicals that goes into different medicines shuts down for a time.
Also, to further touch on Amit’s point about increased trust in governments, I also see the potential that the emergency measures being put in place can lead to increased citizen controls and surveillance as after all once politicians have further tools available, it is very hard to roll back from using them. In Western democracies this has the potential to severely backlash leading to further political fragmentation and civil unrest longer term while short term, people in general seem to be coming together in the face of the current crisis.
There is of course a long list of other potential changes to long-term behaviour but I will leave it at that and invite you, the reader, to let us know if you have identified the potential for any broad long-lasting trends.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
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simon plomer
:
I think we will see folding money vanish ,our business now has over 95 % card transactions and that’s with over 2000 customers weekly, money carries too many germs , all those $100 notes buried in the backyard will have to find they way into bank accounts making a lot of taxable incomes go through the roof as cash transactions and money laundering will be easier to check.
Kylie Palmer
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I hope Australia will decide to de-couple its reliance on any single country going forward. We can’t afford to bind ourselves to a single country for our health or economic future. We must ensure our basic requirements….food, water, fuel, medical supplies are either made here or stockpiled in sufficient quantities and also prevent those basic requirements from being exported to our own country’s detriment. This will not be the last crisis we have!
Andreas Lundberg
:
Hi Kylie, that is certainly something to hope for. More manufacturing in Australia would be a positive for the country long term. A lower currency will also help stimulate this.
John
:
Nationalism is back on the table.
Paul
:
Remember after 9/11 how you thought every plane over head was a hijacked vessel heading for a building- it will talks a few years but peolpe forget
Andreas Lundberg
:
Hi Paul,
Of course people forget but new habits formed can be very sustaining if people realise that they simplify their lives. Working from home and on-line shopping are two such habits/trends that I see can be significantly increased by the current crisis.
John
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There are fear based habits that people develop during a crisis but which will dissipate when the crisis is over – as their fear lifts and risk is better understood.
There are permanent changes in habits/practices that relate to changes in social structures and culture/rules/dispositions/technological innovations that are socially generated by the crisis. In relation to 9/11 this relates to, for example, changes involved in boarding planes or changes in public attitudes to terrorism related phenomena.
Roger Montgomery
:
well put John. Thanks.
Edward Mitchell
:
Wow, one day after the governments referents to its policy regarding a six month moratorium on evictions, two of my tenants have told me they don’t intend paying any more rent, one only has six months left on their lease, I feel like I am supplying government housing, the rent puts food on my table!! Clearly this hasn’t been thought through.
I own my investment properties, so don’t qualify for the pension or mortgage relief, can’t apply for Centrelink payments!!!!
Andreas Lundberg
:
Hi Edward,
Very sorry to hear that. There will definitely be people trying to take advantage of the rules and unintended consequences as well as people being protected that are genuinely in distress. I think the government will have to rethink the new rules and institute some arbitration process.
Michael Winter
:
Not sure about trust in govt. That will depend on how much the govt roll back all the controls they implemented.
Also one that I think you have left out is repeat occurrences of this. I suspect now that it has been done once that we are going to be more likely to see future shutdowns as soon as there is any hit of repeat occurring, maybe even for standard flu’s. Hopefully not but this is how govt tend to work.
Andreas Lundberg
:
Hi Michael,
You definitely have a good point there. The trigger level for the next pandemic will certainly be lower.
Also, we will likely see the shutdowns come and go until there is a vaccine available as there will most likely be new flare-ups when restrictions are lifted. We are seeing that in China at the moment with one county with 600,000 inhabitants going back into lockdown after a new flare-up of infections.
John
:
The universities and foreign students has mostly been a scam for a long time. This scam can probably be run online more efficiently.
The remote working feature will have huge consequences – cities will increasingly go into decline. The need for travel will not be so important.
My view on vaccine development is that increasing liberalization of testing regimes will not be possible. Vaccine development and the development of pharmaceuticals more generally is a serious business that requires serious science. The reality is that there should be more rigorous testing (rather than less) – many drugs are found to have serious side effects well after they are released and I am quite sure that many medications currently on the market will later be withdrawn. I would be very worried if a vaccine is hurried through.
As for trust in governments – so far the authorities have not been doing a sterling job – policy is reactive, based on identity management , lacking in common sense and a basic level of intelligence, and a misunderstanding of who the credible experts are. Trust in government depends on social democratic institutions that are honest and which are willing to communicate what might be unpleasant realities and likewise the public needs to think of themselves as citizens rather customers. Perhaps this crisis among other will help cleanse out this consumerist mentality.
Heleen Tee-Friedrich
:
What scam are you referring to, John? May be some. Most foreign students are spending large amount of money to obtain educations they could not get at home. Study overseas provide an experience and exposure to another country’s culture and life styles which online learning at home would not be able to offer. There are many other reasons and advamtages for studying overseas. The short memory of the Covid-19 in the future would not stop many students to go overseas.
Remote working probably will affect the demand for small city apartments after the lockdowns.
John
:
HELEEN
This issues of tertiary education scams was covered on 4 corners May 6th 2019 – can be found on you-tube.
I sure there are some exception but the general issues are poor teaching, poor standards, students unable to speak English and hence unable to learn, widespread cheating (that is the work they are submitting is not necessarily their own – I know this is not every case but it is well understood this is what has been widely happening).
Lecturers and tutors aware of all these problems but if they whistle-blow they are targeted by management. In relation to soaking up the culture many overseas students find it difficult to fit into the Australian culture and tend to stick together (I am sure there are some exceptions and I know some of these). I want to make it clear that I am on these students side – they are the ones that have been scammed.
I am aware of my many overseas students (from India and china) who come from not well off families who are promised much, come here to study and can’t get a well paid job after finishing a very expensive degree with no ability to repay it. Many are uber drivers and so on.