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June 26, 2022

How normal is the return to normal

Macro commentary by eToro analyst for Romania, Bogdan Maioreanu

Governments are preparing to lift Covid restrictions. Denmark already lifted almost all restrictions, followed by Norway. Sweden also lifted restrictions considering that we entered into a new phase dominated by the more contagious but less severe Omicron variant. In the Czech Republic people no longer have to show Covid passes to go to restaurants, bars, sporting and cultural events. France and Italy removed the obligation to wear masks outside, still maintaining them inside. The UK is looking to scrap all remaining restrictions including the legal rule to self isolate in case of infection. Even Romania is looking toward lifting most of the pandemic rules.

According to an IPSOS survey that asked 22.000 people in 33 countries if the pandemic will ever end and how we will know it, there is no consensus on the answer. 20% say it’ll be when at least 75% of the population have been vaccinated, 19% say it’ll be when transmission of the virus has completely stopped, and 17% say it is when hospitals have had normal operations without staffing or equipment shortages for at least one month. In addition, 12% say it’ll be when there are fewer than 10 new cases for every million people per day and 7% say it’ll be when there are fewer than two deaths for every million people per week. And tellingly, 14% say they just don’t know. Meanwhile, 8% say the pandemic has already come to an end. Returning to normal might be in sight, but how will this new normal look?

Travel that was seriously impacted in the past years will see a surge. By example, Britain’s biggest airport Heathrow had a slow start to 2022 after Omicron fears ruined travel plans of more than 1.3 million passengers, it said recently. But the largest German tour operator TUI is seeing a surge in demand for the British summer vacation as testing rules and restrictions are lifted.

Lifting restrictions will not magically restore profitability of the airline industry. An IATA estimation is seeing the industry losing around 11 Billion USD globally this year, much less from last year’s 51.8 Billion USD. But the industry is seeing a possible demand recovery of 84% of the levels seen in 2019. Returning to normal is not only about travel and holidays. Some companies will have to bring people back to the office, which is a difficult task in itself. A Gartner poll showed that 48% of employees will likely work remotely at least part of the time after COVID-19 versus 30% before the pandemic.

Working from home, despite its shortcomings, proved to be beneficial and economical for a lot of workers. But the distance from work made companies think of new monitoring methods. Gartner analysis shows that 16% of employers are using technology more frequently to monitor their employees through methods such as virtual clocking in and out, tracking work computer usage, and monitoring employee emails or internal communications/chat. While the pandemic expanded the gig economy, after the pandemic ends, this trend will likely move into the corporate space too. As a cost saving measure, companies might replace some full-time employees with contingent workers. The digital trends that started in the pandemic will likely continue. Teleworking, telemedicine, remote learning and delivery services will develop. And a hybrid work environment is here to stay.

Despite the jokes at the beginning of the lockdowns in 2020 that the pandemic will create a baby boom, the reality is somewhat different. Looming uncertainty caused many to delay having children, accelerating the pre-existing population decline. There are estimations that the empty planet scenario, or ‘population bust,’ expected by 2050, may come sooner. This is having large implications starting with the workforce and ending with the pensions system. This situation is also creating the need for aging population services, bringing new investment opportunities since older generations have more spending power and rely more on public services.



Bogdan Maioreanu, eToro analyst and markets commentator, has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania among others. Bogdan is an Executive MBA from Asebuss and Washington University.

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