For the first time in a century, the world faces a pandemic and as always, scientists had been right: the virus is too contagious to be eradicated. People are still struggling to get comfortable with the idea and since they crave old habits, infection numbers continue to accelerate across the world. Even the countries that managed to bring the spread under control are starting to see increased numbers, as they import a lot of cases.
A second wave of the pandemic — the biggest risk?
One of the main concerns for the next few months has to do with a second wave of the pandemic, much dangerous than what had already happened. With still limited knowledge on the novel coronavirus, it’s hard to anticipate whether it will be a flu-like disease spreading seasonally.
On a global scale, daily new cases continue to be around 250k, and healthcare systems are operating near or at full capacity. Temporary cures had been found, but hopes are attached to a new vaccine or treatment that can reduce mortality, make people more confident, and ultimately get the economic activity back to more normal levels.
Adapting to the new normal
Whether people like the idea or not, epidemiologists and doctors around the world are suggesting the social distancing measures are here to stay, even after a vaccine will be developed. Wearing masks, keeping a safe distance from one another, are banning large gatherings would be the new normal and despite frustration rising, we need to get accustomed.
Some industries like tourism, transportation, industry, and consumption would have to face one of their darkest periods, but in order to keep healthcare systems operating, humanity has to make sacrifices.
Stock market performance
Financial markets around the world had been on a roller coaster since the start of the year. The initial panic selloff, which led to record-breaking losses, was followed by a strong rebound in most of the developed and emerging economies. The combination of monetary easing and fiscal support had been enough to produce short-term confidence among investors, but at the same time, created artificially high valuations.
The near-term performance will be highly dependent on how the pandemic is managed and whether the economy will benefit from a V-shaped recovery. For now, high-frequency data suggest a leveling-off now that rising infections are diminishing people’s confidence to go out and spend money.
Effective leadership, professionals, discipline, and coordination are just some of the requirements for reducing damages in the months ahead, but having all of them at the same time seems difficult right now, considering rising tensions within and between countries.
Can governments prevent an economic depression?
Lockdowns had proven to work in reducing the spread of the virus, but with great economic costs. Governments are now trying to balance social distancing measures while also keeping economies operating close to normal levels. “Flattening the curve” is the mantra for all countries and now that drugs like Remdesivir and Hydroxychloroquine had proven to work, the death rate stands below the April highs.
However, the second quarter was devastating for the global economy and it will take a strong Q3 and Q4 to reduce the damage. If that won’t happen, governments will need to step up stimulus once again or face depressed economic conditions. Their goal is to prevent such occurrence, which is why spending had been ramped up, although the debt-to-GDP ratios will balloon. Humanity faces one of its biggest tests. How the world will look after this is said and done? No one can tell for the time being.