Economics in a pandemic
UB researchers show how the economic situation can evolve in different sectors after COVID-19.
COVID-19 has caused an economic crisis that has affected the productive sectors of our society unequally. We will explain the main economic consequences of the pandemic that we are experiencing and how our economic context can change.
The situation resulting from COVID-19 presents new questions which are yet to be solved from an economic perspective. First, the current situation “does not come from a macroeconomic imbalance, like it happens in many crises, but from the restrictions on production and mobility”, notes Miguel Ángel Santolino, lecturer at the Faculty of Economics and Business. Moreover, unlike other previous pandemics, the main effects of COVID-19 in the economy have not been caused by the health problems of the population or the deaths, but by the measures that have been taken in order to reduce infections. “This happens so because, unlike other pandemics, the incidence of COVID-19 on working-age population has been reduced”, says Professor Josep Lluís Carrion, from the Regional Quantitative Analysis Group (AQR-Lab) of the UB.
Predictions are hard to make, but it is easy to see that COVID-19 has affected the productive activity in different sectors unequally. Some sectors have seen their activity being reduced to zero, while others have carried on by making the necessary changes.
Tourism, commerce and finances
The great impact on tourism is shown on the figures. Last year, the expenditure on tourism in Catalonia decreased by more than 80%, according to data from the Catalan Government. Professor Jordi Suriñach explains how the economic impact of COVID-19 is quantified in the Catalan tourist sector, in a study conducted by AQR-Lab: the decrease in turnovers ranges between 14,380 and 17,998 million euros and job loss ranges from 101,939 to 137,027.
Lecturers Jordi Arcos-Pumarola and Oriol Anguera-Torrell, from CETT-UB, affiliated center of the University of Barcelona specialized on tourism, hospitality and gastronomy, reflect on the recovery options after the pandemic and stress the importance of technological innovation: “Technology, which had been under transformation for years in this sector, is still an ally to offer security, for instance with the general implementation of contactless check ins and outs”. According to the experts, “COVID-19 will give rise to a new digital revolution in the sector, and many of these technological changes will come to stay for good”. Regarding the post-COVID tourism, they say there is “a clear opportunity to promote a new structuring for the sector to consider debates that were held before the pandemic to find a better fit between the tourist sector, territory and citizenship”.
Another sector that has been affected by the pandemic is commerce. Montserrat Pareja, lecturer at the Department of Economics, notes some of the trends the crisis has accelerated, such as people’s preference for local trade: “The zero kilometer and other precursor movements already existed, but the pandemic raised the awareness”. At the same time, there has been an acceleration of the online commerce, which has “raised awareness on what we buy and where it comes from”, linked to a concern on sustainability. Pareja also notes that the pandemic has reinforced the idea that shopping malls, “are not only a place to shop but also American-like style leisure areas”. Regarding small businesses, there has been a considerable number of shops that have closed, which made us more aware of the importance of commerce in the urban environment”.
The reduction of people’s journeys “has affected all economic sectors that benefit from interaction and face-to-face activities, such as shopping malls”, notes the expert on urban mobility Daniel Albalate. In addition, there is a greater presence of “individual ways of moving from place to place (cars, motorbikes, bikes, skates, walking, etc.) which are understood as a safer option”. As a result, “open-air malls, with enough access for these individual ways of travel (with available car parks or well-built in the city) are more attractive in the current context”.
The pandemic has brought changes in other sectors in terms of how to work, but some have carried on with new products. This is the case of the finance and insurance sector. “Insurance companies have undergone a reduction in the marketing of new policies, but the sector has adapted using digital transformation and creating new products, coverages and services”, notes Miguel Ángel Santolino. Montserrat Guillén, professor at the Faculty of Economics and Business, notes that “the finance sector is optimistic about the expansion period to arrive, with full capacity to fund new projects, opting for sustainability, which is receiving more value every time”. Regarding the insurance sector, “there is a new demand of insurances in the market to cover risks regarding future pandemics: for instance, insuring temporary businesses, sudden loss of benefits or supply interruption”.
From a global perspective on business management, the companies of the different sectors plan to “promote issues which were already a key”, notes Jaume Valls, professor of Management. He highlights aspects such as innovation, flexibility (in a context of supply chain redesign), digitalization, public and private collaborations (which have reinforced their importance) and a business leadership to reinforce “a cooperation perspective, online management, and holistic approaches”.
We will see, in an upcoming report, how these changes affect people who work in these companies. We will talk about how COVID-19 has altered the labour market and the social consequences it has brought.