We are living through unprecedented recessions. The eurozone’s GDP contracted by 12.1% in the 2nd quarter of 2020. Some EU countries like Sweden (-8.6%) and the Netherlands (-8,5%) fared somewhat better, as they opted for no lockdown or a “smart” lockdown respectively. Heavy-weight Germany, already in troubles because of its sluggish car industry, sees its GDP contracting by -10.1%, and Brexit-plagued UK has its GDP contracting by a whopping -20.4% even. Hard lockdowns have hurt Spain (-18.5), Italy (-12.4), and France (-13.8%) a lot as well. The seasonality of the coronavirus is helping the eurozone to recover in Q3, and will technically end the deepest recession ever recorded, although the final figures will be published in about three months’ time. But, the damage is already done. And, what will happen now that the 2nd COVID-19 cycle has started in Europe with its temperate climate?
There are a few things that are comforting. Thanks to a better knowledge of COVID-19, and the availability of treatments, the mortality rate has been steeply going down. At least in Western countries. Further treatments and medication are tested, which will continue to increase the arsenal of therapies with which doctors can improve COVID-19 mortality. Finally, there is a glimmer of hope as a number of vaccines went into phase 3 trials, in which tens of thousands of people get a vaccine or a placebo administered. The expectation is that at the end of 2020, or at the beginning of 2021, a sufficiently effective vaccine will be made available to the public. Also encouraging is that there is a statistical finding that the mortality under older people vaccinated with the ordinary flu vaccine, is lower compared to older people that are not vaccinated.
Given the available data, it’s now more likely that Western governments will avoid the Wuhan-style hard lockdown regimes that devastate the economy, and will opt for more moderate, smart lockdown options: regional measures for regional outbreaks, social distancing, mouth caps in crowded places, improved climate control systems to avoid recirculating contaminated air in closed spaces, UV light decontamination, obligatory self-quarantine, travel limitations, etc. etc. We all know the drill by now.
What’s the silver lining in all this? The environment is a big winner. The pace of innovation in the medical industry is unprecedented. The overheated labor market in countries like the Netherlands is cooling down, making it easier for businesses to hire the right people. And, e-commerce and flexible working styles are becoming commonplace. Shopping safely is shopping online. Working safely is working from home, online. The e-business infrastructures are present. Countries like Spain and Italy are quickly catching up with the Nordics and the Netherlands. Finally, the COVID-19 crisis has unmasked bad government like the ones in dictatorial Belarus, where my close friend Alexander Vasilevich was jailed for two weeks like so many others, or corrupt Libanon, where the fertilizer explosion in the harbor was the final straw. A new period of social unrest might lead to political and social revolutions that were unthinkable until recently.
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