Economy in Post-Pandemic Era

AFP

This combination of pictures created on April 26, 2020 during the COVID-19 coronavirus pandemic shows (starting from left top corner) Spanish Ramon Montesinos Roman, shepherd, posing for a picture in Ronda, Spain, on April 23, 2020.

Social distancing, limiting face-to-face meetings and avoiding crowds are all part of the standard procedure to prevent the transmission of the new coronavirus, which causes COVID-19. One of the solutions is online interaction and communication.

The information and communication sector will become the cornerstone of changes in people\'s behavior due to the rapid adoption of online interaction. In 2015-2019, this industry was one of the sectors with an average growth of 7.5 percent, higher than the gross domestic product (GDP) growth of 5 percent. In the new balance, the growth can reach 11.5 percent a year but it will only be temporary, and will return to old growth patterns.

What has adapted quickly is higher education, which has applied online learning methods. The average growth in education services in 2015-2019 was 5.1 percent on an annual basis, slightly higher than the annual GDP growth of 5.02 percent.

Read also: Coronavirus and Economic Resilience

By sorting the degree program package into an individual subject, plus the use of more flexible learning method, such as mixed or full online, people who are interested in improving their human resource capacity will increase. With this scenario, the growth of the education service sector is expected to surge at least to 15.4 percent per year in the next two and three years.

KOMPAS/TOTOK WIJAYANTO

A store attendant arranges a mannequin on Monday (23/3/2020) at a shopping center in Kuningan, South Jakarta, where most shops have posted notices of temporary closure. The decline in economic activities in Jakarta is expected to prompt migrant workers in the informal sector to return to their places of origin.

The need to keep a distance in the production process can also contribute to an increase in the use of automation / robotization in the workplace, especially for jobs that are repetitive. Company consulting services will be indispensable for rearranging the production process, office interior layout and workflows. In the scope of strategic management, consultancy services are needed to develop new business strategies, including adjusting market niches, marketing methods, finance, human resources, and others, due to the change into a healthier lifestyle.

During the 2014-2019 period, the growth in the service sector was 3 percent above the GD growth or 8 percent per year. This figure is estimated to double at the end of 2020 and 2021, and return to normal growth patterns in 2022, which is about 9 percent per year, as the new balance in the new normal era.

Intermediaries which act as clearing houses will transform into online businesses.

The logistics business will grow along with the increasingly limited physical contacts “between consumption and production”. Intermediaries which act as clearing houses will transform into online businesses. In 2015-2019, warehousing, transportation, postal and courier services sector grew 2.6 percent above GDP growth or 7.7 percent on an annual basis. This trend will continue in post-COVID-19 era with growth approaching 10 percent per year.

At present, public transportation is dominated by rail-based transportation, with most of its added value obtained from freight transportation. In the same period, rail-based transportation grew 4.5 percent above the GDP growth or around 9.4 percent per year. In the post-COVID-19 era, this business sector is estimated to grow at least 18 percent per year before returning to normal patterns to round 9-10 percent per year within one and two years.

Read also: Covid-19 and the Economic Stimulus

Industries that will also grow faster due to new lifestyles in post-epidemic era are sanitation and medicines, including herbs and supplements. During the 1998 monetary crisis, this industry grew positively two quarters faster than the GDP growth. With the improvement of the healthy lifestyle, demand for traditional medicines such herbal supplements such as ginger, turmeric, ginger, and honey, is expected to bloom again.

Also interesting to note are the trade, hotel and restaurant sectors. As during the 1998 monetary crisis, the sector is expected to recover relatively quickly if COVID-19\'s vigilance procedures are followed. For example, some airlines in the United States now require the use of masks and other COVID-19 standard operating procedures, which are needed to improve consumer confidence. Without this, the sector can only recover in four quarters.

Kompas/Yuniadhi Agung

Anomali Coffee coffee shop in Kemang, South Jakarta, is deserted on Friday (20/3/2020), far different from weeks earlier. Visits to the café, known as a hangout spot, have fallen sharply due to the COVID-19 outbreak.

The occupancy rate in hotels and restaurants has to be limited to maintain a safe distance; perhaps it should not exceed the 50 percent of installed capacity. To prevent crowds, tourist destinations are restricted from using online registration. First come, first serve. With this way, the hotel and restaurant sector are expected to maintain growth in the normal pattern of 2018-2019, which is 5.6 percent per year.

Read also: Hope after COVID-19

Adjustment and transformation

The sluggish economic growth and massive unemployment are signs that the structure of the economy and the labor market are no longer in line with new habits arising from world standard operating procedures that have to live with the new coronavirus.

The sectors are still the same, but the mode of production and distribution changes according to the general standard procedure for COVID-19 prevention.

Like some fauna species hibernating in winter by lowering the speed of metabolism, the economy can be also reduced temporarily due to health emergencies. However, this condition cannot last too long so that it will not cause damages to the consumption, production, distribution chain and the people’s income.

KOMPAS/AGUS SUSANTO

Ari Kuncoro

The reality is that the economy will coexist with COVID-19 for some time to come. Consequently, economic behavior must be integrated with efforts to reduce transmission. For governments and communities, maintaining distance and clean and healthy lifestyle have become a new normal habit that will become the new norm.

Ari Kuncoro, Rector of the University of Indonesia