Pandemic Forecasts- What’s in Store for Us Between 2021-22?

This December, the world will be approaching a year since news of the unpredictable coronavirus first came out. Since March 2020, economies have been strained under the uncertainty brought about by subsequent lockdowns. The pandemic forecasts have just shown an exponential rise in the cases ever since the onset.Some sectors such as healthcare, manufacturing, logistics, and online learning, have surged in demand. The lockdown has forced others to lean towards abrupt layoffs, hiring freezes, and increased remote work. Some such sectors include hospitality, in-store retail, travel, and tourism. Consequently, the airline, road, and rail network businesses have run into deeper losses. This has resulted in many professionals working in these areas being out of a job for the last few weeks, months even.We’re all thinking the same thing; when will normalcy return?And when it does, how do we prepare and adapt to it? McKinsey has come out with some very interesting material in the form of consumer market surveys, podcasts, and briefings. In this post, I’ll be doing a sector-wise prediction (Pandemic forecasts) based on the present performance scenario, expert opinion, and the likely outcomes in recovery between 2021 and 2022. Read on!

When will coronavirus end?- Pandemic forecasts

Pandemic Forecasts- What’s in Store for Us Between 2021-22?

One thing we know for certain is that like the SARS and MERS outbreaks in 2002 and 2012 respectively, this too shall phase-out, with two epidemiological endpoints. The first is herd immunity which refers to a sufficient proportion of the society developing resistance to the strain. When we achieve this, we will not require medical emergency intervention units. The second is resuming normalcy in pandemic-interrupted services, such as in-store shopping, sports, and outdoor activity. While trials are going on, clinical scientists remain confident that the following measures will support the second endpoint

Vaccinating high-risk, comorbid people in the population
Early detection and testing kits
Responsive public healthcare
Centralization of government-aided help.

An expert panel from the National Foundation for Infectious Diseases has weighed in on how long safety measures will go on for. One of the pandemic forecasts even going so far as to say that mask-wearing and other social distancing measures will not have an end in sight without appropriate pharmaceutical responses.From a non-medical perspective too, experts believe that people have become more accustomed to doing their face-to-face conferences on video. More companies will oblige to formulate remote work policies for their employees accordingly. This decision will favor both employers looking to slash operating costs, as well as those frontline workers whose job does not require them to report to a physical office. Let us take a look at a few sectors and the recovery timeline for them

A) Aviation

1. History of financials and sustainability

According to the Aviation benefits report released in 2019, airlines operated more than 100,000 flights and flew over 12 million passengers and USD 18 billion worth of cargo in 2018. They brought in a revenue of 8.3 trillion.

2. Present Scene

While the industry has always been impacted by cyclical recessions, the COVID-19 pandemic has led to many carriers filing for bankruptcy due to frequent cancelations, suspension of bookings, and lockdowns restricting incoming and outbound flights. 2020’s passenger demand has gone down by 38% and more, resulting in losses of USD 46 billion. The only flights going out are repatriation missions, medical emergency, and diplomatic flights, such as India’s Vande Bharat Mission.The private sector firm has fared slightly better. Argus International says that while there is a 27% drop, data management consultants predict that recovery will be faster than public and government-owned jets, i.e. within a year.

3. Outlook and Recovery

The reason behind the quicker recovery for privately owned jets is that social distancing measures are easier to follow. While interest in business and leisure travel remains consistently high, the concerns over skyrocketing airfare and fear of getting infected in transit are holding passengers from catching flights. IATA predicts that the aviation sector will not fully return to normal until 2024, at least. By then, the trend of squeezing in more passengers on a single flight by reducing seating dimensions will be reversed, resulting in flights operating at reduced capacity. But with flying services resuming, international and domestic travel will garner renewed interest, which will impact the tourism trade favorably.

B) Hospitality:

1. History of financials and sustainability

The hospitality trade that started out at the turn of the 20th century is presently valued at USD 570 billion worldwide.

2. Present Scene

At present, a few hotel chains have converted their occupancy into isolation units for COVID-19 infected patients. They provide On-call doctors, preplanned meals, and sanitization measures to ensure public safety and movement.A travel survey conducted by preferred Hotels and Resorts reveals that 75% of respondents want to reunite with their loved ones, having been stranded in different locations. The only factor constraining bookings is public safety concerns over places where crowds gather.

3. Outlook and Recovery

The hospitality and aviation trades are closely linked, particularly in sponsoring events and in conducting international economic trade. Holiday getaways and weekend travel is expected to go up. According to Arne Sorenson, CEO of the Marriott chain, there was a 25% decline in hotel revenue in China in the first financial quarter of 2020. 60 days into the pandemic, this number climbed to 90% due to restrictions on travel and social gathering.Some of the measures undertaken by the Marriott chain that have impacted its staff include hiring only for mission-critical roles which means letting go of a few associates, suspending marketing and advertising activities, shortened work hours, and the executive board taking a 50% cut in pay.

C) Education and Learning

1. History of financials and sustainability

According to the macro trends reports , the global education system is valued at an estimated USD 1.3 billion as of March 2020. From a sustainability perspective, education continues to be a priority for all economies, particularly those in trades with skills shortages. It creates the need for imparting these skills via educational programs to a cohort.

2. Present Scene

When news of just how serious the Covid-19 outbreak was, many educational institutions advanced holiday breaks and canceled end-of-term examinations. They sent students and teaching faculty packing to contain the spread of the virus. Provisions were made for online learning and lesson planning to acquaint teaching faculty with tools for conducting sessions online.Presently, schools in developed economies have opened cautiously for certain age-groups. While most are still experimenting with a mix of online and in-person classes.

3. Outlook and Recovery

Distance learning has become the norm with classes conducted on various online platforms. While those in urban areas can have access to classes with hi-speed connectivity, those in remote areas may find frequent disruptions to their classes or teaching schedule.It is expected that educational institutions will fully open their doors to new cohorts only after the second epidemiological endpoint is reached, sometime between April to August 2021. This is because the mass gathering in classrooms for exam and learning purposes is not completely avoidable, and therefore herd immunity is critical to deciding on a date safest for public reopening.

D) Sports and Performing Arts

1. History of financials and sustainability

As of 2020, the sports industry values at USD 500 billion. However, with the Covid-19 outbreak, this sector has lost 45.4% of jobs due to waning interest in spectator sports. As a result, ticket sales have dropped and many international events have been postponed indefinitely. North America accounts for the largest market share in sports, at 30%. Western Europe and Asia-Pacific come a close second.

2. Present Scene

Authorities canceled Chess tournaments, cricket matches, Wimbledon 2020, and the Tokyo Olympics. Project managers are looking at the feasibility of airing spectator views and casting them on channels that stay-at-home working professionals are subscribed to for safe recreation.

3. Outlook and Recovery

While the pandemic forecasts for theatres, concert venues, and sporting areas is that they are unlikely to reopen in full capacity until 2022. The sports industry is expected to continue to grow, reaching a value of $614.1 billion by 2022.

Which industries have risen up during the pandemic?

The need to contain the virus compelled the frontline works to move to virtual offices, prompting individuals to continue working from home. Some firms have become remote-first, while others are revising existing work policies to accommodate telework options for their staff. Still, others are optimistic about reopening physical offices after instruction from their respective government bodies. The reduction of in-person interactions has resulted in the emergence of sectors that have adapted to continue serving their audience online. These include;

1) Food delivery and courier services

In India alone, grocery deliveries such as Big Basket, Grofers, and Nature’s Basket have seen a rise in new sign-ups. Food delivery services such as Swiggy have diversified to Swiggy Go, a delivery and logistics service that competes with Dunzo. These companies advertise nearby stores they pick up items from and allow you to select a time slot for delivery, eliminating the need for you, the user, to transact at an in-person store yourself.E-Commerce giants such as Amazon and eBay have also experienced a larger volume of orders, with vendors selling medical monitoring devices such as pulse oximeters, pressure checkers, and heart rate monitors having to quickly restock their products to meet rising demand. Other popular products include modems and wired and wireless headphones for working professionals. This very demand has also driven up the prices for select items and has in turn created a dependency on manufacturers to come up with more pieces in a batch that are bulk-bought from vendors.

2) Automation industry

The pandemic has resulted in quicker adoption of automation technology. 85% of non-essential workers are now working remotely and will continue to do so. They will leverage an advanced tech stack comprising more collaboration, file-sharing, and integrable tools. Conversational platforms such as Zoom, Skype, Slack, and Yac have seen more adoption by companies who rely on virtual face-time.The automation industry will see more people securing their work on the cloud, accessing files remotely, and calendaring events automatically so as not to miss out on any work-related updates.

3) Pharmaceuticals and Medical equipment

With countries reporting an alarming rise in cases in the second wave of the pandemic, medical stores and pharmaceuticals scrambled initially to meet the rising demand for at-home monitoring devices such as pulse oximeters, heart rate monitors, and infrared thermometers. The demand for infrared temperature sensors increased when retail stores made temperature checks compulsory before admitting shoppers. Biopharma companies like Gilead Sciences have seen their stocks go up in line with Remdesivir’s sales, a broad-spectrum antiviral medication.Hospitals have tied up with pharmaceutical manufacturers for in-patient supplies such as personal protective gear, gloves, and so on. It has led to an increase in sales of medical equipment.

4) Logistics

Before COVID-19, the authorities optimized the supply chain network to find leads and compete for customers with the lowest possible bundles. Today, however, the shift to a nearly fully-online service model has seen companies reducing their dependence on middle-men. They are now offering factory-to-residence or workplace options with the installation of regional logistics ‘hubs’. These points connect customers to more products across different businesses, from food and medicines to agriculture, e-commerce, and documentation courier services.Another reason for the rise in logistics is the influx of people stretching and downsizing in line with move in-move outs. Many are leaving the rented tenements in favor of relocation and rely on movers and packers to move their possessions. If this trend continues, logistics will adopt high-end transactional and tracking technology to improve customer service, reduce time, and save on costs.

The Role of Vaccine in influencing the Pandemic forecast

Only North America's isolated case predicts that vaccine adoption and availability could mean that the U.S will be battling with the virus beyond 2022. McKinsey’s pandemic forecasts say that most non-essential and all essential services will resume by Spring 2021, though not like before.The threshold for herd immunity will depend on cultural perception and local norms. But for now, it looks like our mask-wearing days are not yet over. The United States expects to achieve herd immunity by the third, or fourth quarter of 2021. The US Food and Drug Administration will approve the vaccination in early 2021. It follows that with the vaccine becoming more available to the masses, herd immunity that is now being watched will be a distinct possibility in less than six months. The pandemic forecasts ultimately go back to how long immunity can last and how effective the vaccine proves to be.