Page 40 - COVID-19: The Great Reset

the political challenge of vaccinating enough people worldwide
(we are collectively as strong as the weakest link) with a high

enough compliance rate despite the rise of anti-vaxxers. During
the intervening months, the economy will not operate at full
capacity: a country-dependent phenomenon dubbed the 80%
economy. Companies in sectors as varied as travel, hospitality,

retail or sports and events will face the following triple whammy: 1)
fewer customers (who will respond to uncertainty by becoming
more risk-averse); 2) those who consume will spend less on
average (because of precautionary savings); and 3) transaction

costs will be higher (serving one customer will cost more because
of physical-distancing and sanitation measures).

Taking into account the criticality of services for GDP growth
(the richer the country, the greater the importance of services for
growth), this new reality of a 80% economy begs the question of

whether successive possible shutdowns of business activity in the
service sector will have lasting effects on the broader economy
through bankruptcies and losses of employment, which in turn

begs the question of whether these possible lasting effects could
be followed by a collapse in demand as people lose their income
and their confidence in the future. Such a scenario will almost
inevitably lead to a collapse in investment among business and a
surge in precautionary saving among consumers, with fallout in

the entire global economy through capital flight, the rapid and
uncertain movement of large amounts of money out of a country,
which tends to exacerbate economic crises.

According to the OECD, the immediate yearly impact of the

economy having been “switched-off” could be a reduction in GDP
in the G7 countries of between 20% and 30%. [28] But again, this
estimate depends on the outbreak’s duration and severity in each
country: the longer lockdowns last, the greater the structural

damage they inflict by leaving permanent scars in the economy
through job losses, bankruptcies and capital spending
cancellations. As a rule of thumb, every month that large parts of

an economy remain closed, annual growth might fall by a further 2
percentage points. But as we would expect, the relationship
between the duration of restrictive measures and the

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