Written by Professor Alexiei Dingli, Professor of AI at the University of Malta.
The new pandemic which has been circulating the globe will soon reach the half a million mark of infections. It has, so far, killed close to 20,000 people and brought the world's economies to an unprecedented halt.
Businesses around the world are struggling to cut costs in the hope of surviving this outbreak. Stock markets have plunged, thus effecting investments, pension funds and individual savings. Some of the most notable stocks haven't recorded similar losses for decades. Of course, this has a massive effect on investors who are wary of investing their money, and as a consequence, lose trust in the market and hinder economic growth.
Governments around the world are racing to enact new ordinances and legislations aimed at protecting jobs. One of the situations they are trying to avert is the rise in unemployment because it automatically affects the productivity of the country and increases the social payouts. Banks, too, need to play their part, and in fact, several central banks are intervening to cut interest rates, thus making borrowing cheaper, encouraging spending and injecting back some cash into the economy.
Of all businesses, the travel industry is the most affected. In an unprecedented move, governments worldwide introduced travel restrictions to try to contain the virus. This measure resulted in the interruption of scheduled flights and subsequently the cancellation of business or holiday trips. The effect of this was devastating since hotels, tour operators and those directly involved in tourism had to grind to a halt. There are also many supporting sectors (food industry, cleaning services and others) that are all directly affected by this.
These restrictions eventually will create a liquidity problem. People don't have money to spend and prefer to save the little they have for the essential goods. The fact that they have to stay at home due to social distancing has also caught businesses unprepared. Many of them do not have proper e-Commerce sites and are finding it difficult to service their clients. Luckily for them, social media sites are facilitating online sales; however, they are no match for proper e-commerce enabled websites.
This situation should be an eyeopener for many. There has been much resistance for many companies to move online. Now they have no choice, and their only lifeline is the online world. Big restaurants who resisted deliveries are now hastily organising themselves. Even small stationers are doing their utmost to keep on servicing their clients. This global emergency has created a new need and businesses have to venture beyond their comfort zone if they want to survive.
Factories, too, are experiencing a slowdown. The sourcing of raw materials is becoming difficult due to the logistical constraints and costs are quickly increasing. Considering that countries are estimating that around 70% of their population will get sick in the coming months, this will possibly harm the production of these factories, and we will experience a natural slowdown. Finally, since people are buying less, the demand for certain goods is also falling.
Even though this is an unprecedented crisis whose scale is still challenging to determine, a quick look at past events will reveal specific trends. The most obvious is that most probably, the world is heading towards a global recession.
However, not everything is doom and gloom. There is something different this time around. Most people can comfortably live in an online world. Entertainment, education and many services can easily migrate online. The technology is available, and in most cases, free or extremely cheap to use. Retailers and restaurants can keep on selling through social media if they don't have a website, which means that part of the economy can still keep on functioning. Many of the other industries cannot migrate online, but it is the right time to ponder whether part of their operations can be automated. Today Artificial Intelligence can do miracles. We have entire factories operating with robots, deliveries performed by drones or self-driving vehicles, and the list goes on. Furthermore, with the rise of technologies such as Virtual or Augmented Reality headsets, we can have operators running these machines from the comfort of their home. The possibilities are endless.
If I had to make a bet, I would say that the pandemic of today is just one of many yet to come. Bill Gates already made this prediction back in 2015. It is indisputable that we are not ready to handle such situations. So let us all use this time to plan for the next one. To set up e-commerce websites, to install Artificial Intelligence Systems which assist us, to make remote work a standard practice rather than an exception, so that when the next pandemic comes, it will be just business as usual where possible.
Prof Alexiei Dingli is a Professor of AI at the University of Malta and has been conducting research and working in the field of AI for more than two decades, assisting different companies to implement AI solutions. He forms part of the Malta.AI task-force, set up by the Maltese government, aimed at making Malta one of the top AI countries in the world.