OPINION | Is Covid-19 the crash we didn’t see coming?

Before you read the rest of this column, I think it’s important that you know who wrote it.

I work as a financial reporter. I learn new things every single day. I don’t know everything, and I probably don’t know enough about the novel coronavirus either – I’ve been selective about how much I have read about it because the content out there is depressing. What I have written about Covid-19 so far has been limited to what analysts have projected the impact of the outbreak might be on the South African economy, and about very wealthy people and companies making multibillion-rand contributions to help the government reduce the negative impact of the outbreak.

I am also a part-time student. I have been learning about why it’s important to pursue a path of development which is cognizant of the earth’s ecological limits, if future generations (read: people like Greta Thunberg) are going to be able to survive one day.

Lately I have been asking myself: what is my responsibility in shaping a better world? This is probably the most important part of my disclaimer. 

Back in February, I was in class, learning about how we were on the brink of transitioning to a more sustainable wave of development. But for that transition to take place, we have to go through a crisis. It is expected that the crisis would spur on innovation, to pull us out of a hole, so to speak.

The question remained – where would the crisis come from?

We’ve heard about the oil crash in the 1950s, the dot-com bubble bursting in 2001, and more recently, the global financial crisis caused by the US housing bubble back in 2008. But had you considered that the next crash would come from a virus? That is the stuff of movies, is basically what my lecturer told me… before responding with a “maybe”.

At the time, Covid-19 had not yet been declared a pandemic. But it was already impacting the oil price, due to lower demand from China. It still felt so far removed from us, because there had not yet been any reported cases in South Africa.

When I returned to work and started checking in with analysts, and even government officials about whether the Covid-19 could be the catalyst for the next global financial crisis – no one could really give a definite answer. I don’t blame them – there was uncertainty about how much the virus would spread.

Let’s consider what’s happened since then:

  • Covid-19 was declared a pandemic by the World Health Organisation.
  • Investors went on risk-off mode and started selling stocks like crazy – there’s even a Wikipedia page for it.
  • Emerging market currencies suffered the most as investors flocked to “safe havens” like the US dollar.
  • To make things worse for the oil price, Russia and Saudi Arabia enter into a price war, which results in more bleeding.
  • Central banks across the world implemented measures to manage liquidity in markets, which didn’t always have the desired effect.
  • The death toll has been rising and everyone is studying Italy and Donald Trump to learn what not to do.
  • Lockdowns were instituted across multiple countries, including in South Africa– bringing economic activity to a halt.
  • In between all this, people started being greedy about toilet paper, face masks, hand sanitisers, but mostly toilet paper.
  • Clever people from important institutions start revising growth estimates because a global recession is upon us.
  • To add more injury domestically, Moody’s downgrades South Africa to junk status, attributing it to a deteriorating fiscal strength and “structurally very week growth”. To be fair, Moody’s, we’re not the only country trying to respond to a pandemic.
  • And, coming back to all the content out there; we keep reading about how the world is changing. It’s not going to be the same, guys. It’s going to be different. Brace yourselves for a different world, which is going to be completely changed! (Redundant much?)

Now that we agree that the world has been changing, I’d like to point out that smarter people – more knowledgeable of the matter – are predicting more outbreaks in our future “changed” world.

A drawing board moment

In a TED talk given earlier this month, global health expert Alanna Shaikh suggests that we will experience more epidemics because of the way humans interact with the planet. “Human choices are driving us into a position where we are going to see more outbreaks,” says Shaikh. This can be attributed to climate change (which is not a myth) specifically warmer global temperatures creating an environment for bacteria and viruses to thrive. Shaikh also says that as humans move into wildlife spaces, we’re also coming into contact with species we normally would not have, which are potentially carrying new diseases and bacteria.

But things don’t have to be that way, if we make better choices.

In our country, we have seen the good that can be done when members of society set aside their differences and work together for everyone’s best interests. I’m not only talking about the efforts made in recent days to limit the negative impact of Covid-19 on vulnerable communities. We’ve done this before, multiple times in our young democracy – whether its different role players coming together to determine a new national minimum wage, or academics connecting the dots to expose the invisible hands behind state capture, we’ve achieved so much together.

So when smart people are saying South Africa’s economy isn’t going to grow much this year, if at all; perhaps we could come together and tackle that beast together? That’s just the dreamer in me. 

If Covid-19 launches the crisis we need before we transition to a “golden era” then we should use this opportunity to reevaluate how we do things. We can restructure our economy in a way that not only benefits those who are already wealthy. We can redefine what development looks like – so that it is beneficial for all members of society and still within planetary boundaries. This is our drawing board moment. 

Let’s make better choices.

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