The biggest impact may be on employment. Those who are unemployed will find it harder to get a job (except well-prepared people who are eager to work), those on temporary contracts will find it harder to find another, and those with permanent jobs in the companies hardest hit by the coronavirus, which may end up closing despite injections of public money, may also lose their jobs. Companies not tied to sectors with a future (health, the environment, new technologies, the internet, etc.) may adjust headcount and salaries to adapt to the new environment according to the effects on demand caused by the coronavirus. This may cause private consumption to fall, because if consumers have less money and the future is uncertain, they spend less, concentrate their spending on essentials and try to buy at the lowest possible price.

Foreign tourism, and European tourism above all, will possibly fall. Domestic tourism could also tend to decline (fewer days and a search for the best prices).
Exports could become more difficult in both volume and price, as there could be less demand, especially in Europe. In addition, there could be a greater tendency toward protectionist policies that make exports outside Europe harder.

Investment by companies, except in sectors with a future or in excellent companies, will possibly be reduced or delayed, which will hurt the economy in the short term and also in the long term, because companies that do not modernize in time end up shrinking or disappearing, so a source of wealth creation is lost.

Public consumption and investment after the coronavirus effort (which is pure spending and not an investment that makes the country more competitive) will tend to decrease, since there will be a great deal of debt and far more spending on health care, unemployment, social aid, debt interest, guarantees granted, etc. Only the European Central Bank or some European body will be willing to buy debt without a significant risk premium. Public debt may grow much more in the southern countries (where, for now, the coronavirus has had more serious consequences and which were already at the limit of their indebtedness) than in the northern countries, and this could make a European solution to rising debt more difficult and could lead to a higher risk premium for the most indebted countries, including Spain and Italy.

Likewise, this economic and social malaise may foster a very complicated national and international political environment that could cause more political, economic and social instability (we have already seen what happened with the 2008 crisis). If until now we were in a VUCA environment (volatility, uncertainty, complexity, ambiguity), from now on it will be even more VUCA. This makes the future less easy and comfortable, but at the same time more interesting, with more challenges and opportunities because of constant and unpredictable change.

In principle, according to economists, each week of lockdown may mean a 1% reduction in Spanish GDP for 2020. In 2021, depending on how long the lockdown lasts in Spain and in the rest of the world (especially Europe), Spanish and European GDP could return to growth. Beyond 2021 there are many variables that may have an effect and it is hard to make forecasts; the most logical outcome would be for the economy to grow if politicians and companies do things reasonably well, so that there is a certain degree of political, economic and social stability.

The monetary and fiscal policy being applied in Europe and the United States is like giving a sick patient a treatment that cures them for now but leaves them weaker, so that in the future they are more likely to fall ill quickly and curing them will be harder because the treatment will have less effect. This can be alleviated if, after this illness, the patient is prescribed a medicine and a lifestyle that strengthen their immune system, making them stronger against possible future illnesses.

The effect of the coronavirus on companies will depend on the sector they are in, their size, their prior financial and competitive position, and how well they react in the short term to this new, more complex and uncertain environment. According to the experts, in the short term the best course is to make decisions that do not damage the core of the business, and not to rush. Take all necessary measures in the short term to protect employees’ health, design an effective new way of working, secure service from suppliers, look after customers, plan the company’s liquidity and maintain good relationships with the company’s key people. Better management and more leadership than ever will be needed. As the environment evolves, we will have to keep acting to adapt as well as possible, always with employees and customers in mind. Most likely, the company will need to be redesigned to make it more flexible and competitive.

It is as if a company were a Roman ship with sails and oars carrying perishable cargo. Suddenly there is no wind (the economy is not growing, or is shrinking), so the sails no longer help us move forward and the only way to advance is by rowing. But the ship also has to carry more cargo for the accounts to come out positive (more costs, more taxes, lower margins, more aggressive competitors, etc.). In this situation, to move forward the rowers (the workforce) will have to row harder, but not by the whip; better with a more efficient technique (training, empowerment, motivation, purpose, teamwork, more effective methods, etc.). The design of the ship will also have to be improved (investing in machinery, marketing, research, innovation, etc.) so that it sails better (becomes more competitive). In improving the ship’s design we must also think about improving the sails for when the wind blows again. Finally, the course (the strategy) must always be the most appropriate one, so decision-making will have to be fast and sound, because there will be little room for error in reaching a good port (customers) with the cargo in good condition (competitive products and services).

The coronavirus should prompt reflections that help us improve professionally and personally. Given the reality of the new economic environment, we must be proactive and act appropriately to face the future better. There are many positive things we can do. The future depends not only on external circumstances but above all on our attitude and our reaction to them.