Is this the right time to study abroad (MBA) during COVID19 and the global recession which would follow?

Imagine, if it were a one crore question on the popular show Kaun Baneja Crorepati, I guess most of you would use up all your lifelines on this question. The current situation is giving a major headache to MBA aspirants who are planning to pursue a Global MBA in 2020. Thus, to give some relief, this article aims to unfolds every aspect associated with this big question. Read this with an open mindset, for a pragmatic and research-based view on the current situation and my answer to the big question – from a Global perspective.

The answer lies with each one of us - The more we #stayathome the faster we shall get rid of this.

Check SPJSGM Mumbai

They say understanding the problem is half job done. So, let’s first understand this double trouble:

COVID19: This novel corona virus has taken majority mindshare of people in India these days and balance by our holy Ramayana & Mahabharata, which is showing on DD channels during these lockdown days. The lockdown has forced us today to learn ONLINE compared to traditional Face to Face (F2F) medium, be it schools, colleges or universities all of them have swiftly moved to online technologies trying to replicate the same F2F experience in delivery of classes and taking exams. As humans we have a very powerful brain, we have an excellent ability to adapt to any situation, be it demonetization in 2016 which forced us to use online payment platforms like PayTM, Google Pay or Phone Pe to this pandemic which has forced us to use online platforms like Zoom, Facetime, Webex, Skype, Duo, etc to interact with people for work or fun

When will this lockdown/COVID19 end?

Your guess is as good as mine. The answer lays with each one of us - The more we stayathome the faster we shall get rid of this. A recent study by a Singapore based university (SUTD) suggests that India will be 99% free from this pandemic by 6th June 2020 and 97% free by 26th May 2020. See chart. Let’s give this research an accuracy percentage of 75% considering our laidback attitude, which means things would normalize by end of August 2020.

It may take some more time for major metros like Mumbai, Delhi, Hyderabad, Ahmedabad, Jaipur, Indore, Pune to completely get over this pandemic.

With lockdowns all around the world, the same research says that the World will be 99% free from COVID19 by 17th June 2020. Let’s pray this Singapore based university research turns out to be 80% true if not more.

Now, what does all this mean?

SPJSGM Mumbai

This means all academic F2F programs can start from September 2020 in India and around the world

Global Economic Crisis: By the end of 2019, the global economy was already sluggish. This pandemic has acted as a huge catalyst to pull it down faster. International Monetary Fund (IMF) – calls it

The Great Lockdown 2020 and predicts that the economic fallout of the lockdowns around the world will be a ‘never seen before’ event in the modern human history.

Impact of Lockdown around the world: In order to solve the first problem (COVID19) – world economies found #lockdown and #SocialDistancing as the best ways to contain loss of human lives due to pandemic. It was a trade-off – the question was – do we want to save human lives or continue economic activities, the answer to this was a no brainer.

Lockdown has had an immediate impact on industries which rely heavily on social interactions, like Travel & Tourism, Hospitality, Entertainment, Retail and more. Closure of offices and warehouses has led to a disruption in supply chains and reduced output. All this has forced companies to lay off staff, cut salaries, unemployment which in turn results into lower or no income causing uncertainty and lesser household expenditure. This creates a vicious cycle of business closures and further job losses.

The waiting game stayathome – The entire world is playing this game together as one team. The moment the virus is contained by July- Aug 2020, the economic activities would start at a rapid pace. Once the economic activities start, jobs opportunities would be created, and things would only get better from here. This gets proved by IMF in their 2021 GDP predictions (real GDP, annual % change) See Image.

Advanced Economies would be -6.1% in 2020 but will recover to 4.5% in 2021
Emerging Markets & Developing Economies would be -1.0% in 2020 but will recover to 6.6% in 2021
The world output will go up to 5.8% in 2021 from -3% in 2020

This means the world will see a recession in 2020, a recovery in 2021 and growth from 2022 onwards.

Quick Fact –

Recession and Higher Education (MBA) – have been counter-cyclical.

GMAC - in 2009, said more than two-thirds of full-time MBA programs received more applications than they did the previous year.

Modern History of Global Recessions - According to Capital Group’s analysis of 10 cycles since 1950, the average length of a recession is 11 months, although they have ranged from 8 to 18 months over the period of analysis. The deep financial crisis in 2008-2009 lasted about 18 months.

With this understanding, lets now try to answer the big question

An MBA is an investment. Let’s look at the answer to this question from 4 different risk-taking behaviours:

Risk Avoider – If you are someone who just doesn’t like to take any risk in investments, probably this is not the right time for you to look at studying abroad. Look at starting your program in 2022-23. But do remember, there are limited jobs in the market, hence finding a suitable job for the next two years will also be a challenge and you might end up spending it at home doing some online courses.
Risk Mitigators – are willing to take a chance after doing a lot of research, but with low risk appetite. I expect you to start the global journey in the second half of 2021. You might want to pursue a one-year online course in your interest area or work till the lockdown is lifted.
Risk Manager – are people who see risk as an opportunity to grow and have a well thought out approach towards investing. I expect you to look at starting your study abroad journey by Jan 2021.
Risk Embracers – are people who believe in “high-risk – high-return” investments. I expect them to start the global journey as soon as the lockdown is lifted and is safe to travel abroad which can be as early as September 2020.