coronavirus

The New House: End of Open-Plan Living?

The New House: End of Open-Plan Living?

After watching a lot of HGTV lately, it seems that nearly every buyer or anyone looking to remodel a home on nearly every show starts with a similar request: “I want something open concept with a big kitchen for entertaining.” Every remodel starts with smashing down walls to create lines of eyesight from every part of the house to every other part. Buyers want kids to have nowhere to hide. After weeks of lockdown, however, “open concept” living is surely going to undergo an adjustment. The same four walls look more repetitive than ever if they are always the same four walls with no way to escape to another room. Having everyone always in sight sounds considerably less appealing when everyone in the house is in sight and earshot 24/7. Consumers will likely be asking for a lot more walls and more doors in a post-COVID period. Another new “must have” item: a dedicated home office with a door. This space will no longer be shared with the kids playroom or the guest bedroom. It will now need to have an adequately sized desk, a comfortable chair for extended periods of work, decent lighting and sufficient power plugs to run a much wider range of equipment. Office storage will probably surge as well, as people need to have more files at home, particularly for employees working from home for indefinite periods. Desks will also make a return to children’s bedrooms.

Supporting the Small in a Pandemic

Supporting the Small in a Pandemic

The impact of COVID-19 continues to threaten the global economy, with the effects keenly felt in communities, businesses and homes. The challenges are disproportionately borne by smaller firms, as our survey of AMTC firms in Asia this week clearly indicates. Close to 50% of businesses have only a month or less than a month of cash reserves. Nearly 30% expect to have to lay-off more than 50% of workers. These figures are unlikely to be different from the experiences of smaller firms around the world. With both supply and demand crashing at the same time, companies are in a struggle for survival. The World Trade Organization (WTO) has just released an updated global trade forecast and the numbers are equally grim. Trade is expected to fall by 13-32% this year. This is the steepest contraction since 2008, with the strong possibility that COVID-19 results in worse outcomes than the Great Recession. But perhaps the most serious damage of collapsing trade flows to smaller firms can be found in the disruption to services.  Many small companies are engaged in services.  Some, of course, are obviously affected, such as restaurants, travel and tour companies. Others may be less clearly connected to global trade flows. For every box that is now stuck somewhere or not being filled in the first place, services can be 30-50% of the total value of the goods inside. These services can range from logistics and delivery; cleaning and maintenance of equipment; legal and HR services; graphic design and marketing; and the like. Many of the services of even giant multinationals are supplied by smaller firms. Services are affected not only by slumping demand for goods and their embedded services, but also by direct challenges like the inability of people to meet or travel. 

Hand Soap in a Pandemic

Hand Soap in a Pandemic

There is another type of challenge that firms face in bringing important products to market—a variety of government policies that can limit supplies. This includes tariffs on a wide range of products that are important in combating the spread of the virus. Again, the primary focus has been on face masks and ventilators, but personal protective equipment (PPE) is not the only category of goods that hospitals, health providers, and patients require. Take the simple example of soap. Citizens are being urged to significantly ramp up handwashing to slow or stop the spread of the coronavirus. This practice obviously requires soap. Yet governments have surprisingly high tariffs rates in place for soap. These rates can slow or stop the flow of soap into the market. Vietnam, for instance, has a 27% MFN tariff in place for soap. Nigeria charges 30%, South Africa is 20%, Brazil is at 18%, and Indonesia and India both at 10%.

The Virus, Trade and You

The Virus, Trade and You

As the number of cases of the coronavirus continue to multiply, with increasing cases in a wider range of countries, it is becoming important for companies to start thinking about the potential impact on bottom lines. While a natural reaction might be to curl up on the couch, this is not the time to just cover up and hope for the best. No one can say with confidence what sort of economic growth might be at risk from the virus. But it is becoming obvious that the economic and trade implications can be substantial in the near term. The extent to which the virus causes widespread economic losses depends on at least three things: 1) the duration and strength of the virus; 2) decisions by governments to the virus spread; and 3) the reaction of citizens and firms.

Revisit: Trade in the First Hour of My Day

Revisit: Trade in the First Hour of My Day

All the ways that trade affects the first hour of my day demonstrates one contributing factor to globalisation. But these benefits to me from trade—my ability to use an iPhone alarm, to shower and shave, and to drink good coffee—are trade most simply, not globalisation itself. A decision like Brexit, a desire to decouple from trade or to “build a wall” will not eliminate trade or the ability to enjoy these products; it will merely make them more expensive. It would not eliminate foreign ideas and cultures from permeating society, for those have little to do with trade itself. At its most simple level—taking just the first hour of one’s day—trade is, in short, the ability to enjoy life as we know it. It is the ability to wake up to an alarm while lying on cotton sheets, to walk on tiles and to shower and to catch the bus to work. We misunderstand and underestimate trade at great costs to ourselves and to society.