IEEJ：May 2021 © IEEJ2021
Special Bulletin
A Japanese Perspective on the International Energy Landscape (529)

April 22, 2021

How Has the World Changed under COVID-19?
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanThe COVID-19 pandemic is still on a rampage around the world. According to a release by
the World Health Organization on April 21, the pandemic has infected more than 140 million people
and killed over three million in the world. The number of new reported infections per day was ashigh as 800,000. Japan is declaring a state of emergency for Tokyo, Osaka, Hyogo and Kyoto for thethird time since the pandemic started early last year. COVID-19 infections are increasing in Europeand India. In some countries where vaccination has made progress, infections have decreased. On aglobal basis, however, there is no sign of an end to the pandemic.
More than one year has passed since the novel coronavirus outbreak in the southernChinese city of Wuhan developed into a global pandemic sending shockwaves throughout the world.
It may be no exaggeration to say that the COVID-19 pandemic and countermeasures have become anew normal. How has the world surrounding us changed under the COVID-19 disaster that haslasted for more than one year? I would like to consider life, economy, politics, environment,geopolitics and other matters before and after the outbreak.
First, human lifestyles have changed. People now wear masks and maintain social distance,
reforming their social relations before the outbreak fundamentally. Telework has rapidly diffused torestrict human travel to prevent COVID-19 infections. Online conferences have explosively spread
as a tool to avoid face-to-face meetings. Strict controls or restrictions have been imposed onrestaurant use and operations. Human travel restrictions have dramatically affected internationaltravel. Before the pandemic, massive people had been traveling throughout the world for business,leisure and other purposes. International human traffic has plunged and is unlikely to restore
pre-COVID-19 levels in the near future. Human lifestyles have changed due to the pandemic. As
more than one year has passed since this turnaround, changed lifestyles seemingly have become
business as usual.
Second, I must point to dramatic economic deterioration. Lockdowns including strict
travel restrictions have been implemented as the prevention of COVID-19 infections has become thetop priority. Of people, goods and money required to cycle economy, the first two have become
extremely stagnant, depressing the global economy substantially. According to the International
Monetary Fund, the global economy contracted 3.3% in 2020, the worst deterioration since the Great
Depression in the late 1920s. After enjoying robust prosperity and employment expansion, major
economies suddenly plunged into negative growth territory. How to cope with the serious economicand employment situation, as well as how to prevent COVID-19 infections, has become a toppriority for all countries. Each country has implemented unprecedented fiscal expansion andmonetary easing to recover from the COVID-19 disaster. The IMF predicts such fiscal expansion tohelp the global economy to grow 6.0% in 2021. However, the fiscal expansion and monetary easinglevels that had not been conceivable before the disaster have led to fiscal deterioration in majorcountries. It has become a matter of concern that inflation fears and wild currency exchange rate
fluctuations could trigger capital flights from vulnerable emerging market economies.
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Third, various political changes have been seen. As COVID-19 infection prevention andeconomic recovery after dramatic deterioration have become the most important political challenges,
political stability and management have become dependent heavily on the successfulness ofresponses to the challenges. We can boldly suppose that if without the COVID-19 pandemic, Donald
Trump might have been reelected as U.S. president. Given the importance of the United States for
global issues, such supposition is extremely significant. In reality, Joe Biden won the U.S.
presidency, exerting great influence on U.S. and international politics. The Biden administration has
adopted directions or approaches that differ far from those under the Trump administration. This canbe seen as a great impact that a political change under the pandemic has brought about.
Fourth, I would like to point to the pandemic’s impact on environmental issues including
climate change. As a matter of course, the prevention of climate change serves global interestsirrespective of the COVID-19 pandemic. At a time when the pandemic has infected and killed a large
number of people and triggered serious economic deterioration, how approaches on climate change
as a long-term challenge would be affected has been questioned. In reality, however, a trend ofenhancing climate change countermeasures has emerged even amid the COVID-19 pandemic.
Various factors are conceivable behind the trend. One of the factors is that countries have widely
shared an initiative to link the enhancement of climate change countermeasures to greater investment
in clean energy sources and take advantage of climate change prevention through clean energy
investment for recovering from the COVID-19 disaster and sustaining economic growth. The
European Union has taken leadership in adopting such initiative by coming up with the Green Deal.
Both advanced and emerging market economies have shared such initiative. In terms of influence oninternational discussions, the birth of the Biden administration is also an extremely important change.
As noted above, we cannot ignore the significance of the great political change under the pandemic.
Regarding climate change countermeasures that had been a key global challenge before thepandemic, a great change is the emergence of carbon neutrality as a global key word.
Fifth, we should not overlook geopolitical changes. They include the escalation of theU.S.-China confrontation into a new phase. The confrontation was intensifying even before thepandemic. Since the COVID-19 outbreak, however, the confrontation had been stepped up under the
Trump administration. Under the Biden administration, the United States had been expected tobecome conciliatory towards China. However, the Biden administration has taken an even tougher
attitude against China regarding values including human rights and democracy. The Bidenadministration has given priority to U.S. allies and is seeking to cooperate with Europe, Japan,
Australia and India in confronting China. At the same time, China and Russia have strategicallyapproached each other, adding fuel to global geopolitical tensions. Since the COVID-19 outbreak,geopolitical tensions have deepened and become more serious, without changing their direction.
Sixth, competition for technological supremacy regarding innovation has intensified as
hopes on innovative technologies have grown amid growing interests in carbon neutrality andnational security under the tough geopolitical environment.
I have lectured on energy policy at the University of Tokyo Graduate School of Public
Policy. In a recent lecture before students, I explained the following as factors exerting influence on
global energy supply and demand: (1) economic growth, (2) politics and geopolitics, (3) energy
prices (absolute and relative prices), (4) energy sources and their potential supply, (5) energy policy,(6) environment policy, (7) technological advancement and (8) lifestyles and values. All these factors
have been affected by the COVID-19 pandemic. We frequently hear that history has no “if.”However, considering historic turning points to make thinking flexible and develop strategic
perspectives is important for getting prepared to tackle the next great changes.
2Contact: report@tky.ieej.or.jp