Today while sitting at home during the lockdown period, the only news doing the rounds of every television channel or newspaper is about the Coronavirus. The deadly virus also known as COVID-19 or 2019-nCoV, continues to hog the limelight since it was discovered at the start of this unfortunate year. First detected in China, it has now spread to more than 180 countries infecting millions of people. With the governments imposing quarantines and social distancing, the fear of the infection and downfall of the global economy is increasing ambiguity. In a span of a few months the virus has started a chain of events, changing the lives of the people drastically.
In our previous blog, Coronavirus – possible epidemic of 2020, we gave our readers an insight on the origin of the disease, symptoms and effects of the infection, and a possible economic disruption. Although doctors and health researchers rushed to control the outbreak and find a treatment, the virus continued to grow. From a possible epidemic, the Coronavirus has turned into a pandemic, which is the most severe global crisis since WWII.
As we continue with the aforementioned topic, in this blog we will take a deep dive into knowing the impact of Coronavirus on the Global Economy. COVID-19 restrictions have effectively stopped economies around the world and it is expected to enter a recession in 2020. However, the magnitude of the downturn will depend on the length of the restrictions. The severity of the crisis is likely to leave a long-term impact on the functioning of economies, supply chains and trade relations.
With nearly 4 million affected cases and around 279,000 deaths worldwide, the UN have analyzed the disruption of the global supply chains and international trade. China, often referred to as the ‘workshop of the world’, is a manufacturing giant, as a result the disruption caused by factory closures and export restrictions has had a knock-on effect in multiple markets globally. The automotive, electrical and pharmaceutical industries have been amongst the worst hit, due to their highly complex, globally integrated supply chains.
Speaking about the virus impact, let us take a look at some of the other affected industries
Nothing in the modern evolution of the industry has compared with the global disruption caused by the coronavirus (COVID-19) pandemic. Given that retailers sell across categories, the pandemic will negatively impact some more than others. The outlook is strongest for essential businesses, such as grocery retailers, and those with more well-equipped digital operations.
Effects on the Travel industry
The travel and tourism sector have been heavily affected due to the pandemic with airlines suspending flights and consumers cancelling trips. Majority of the companies restricted travel to the affected countries, border closures and quarantines leading to vast economic disruption.
While the telecommunications sector is rather unscathed as of now, due to increasing demand and consumption of mobile data and broadband services, uncertainty looms over the ambitious 5G implementation plans that services providers had put in place.
Since the outbreak was made known to everyone, the global shares have plunged. The economic growth has been hampered and it is unlikely that any government action will be enough to help with the damage. However, crucial policy measures need to be taken not only to contain the situation, but also to sustain economic growth and financial stability.
Banking and Financial Services
The impact of COVID-19 on consumer financial services will be analogous to the global financial crisis of 2008-09, creating a period of economic paralysis and leaving a massive hole in the banks’ balance sheets. The outbreak has affected the retail banking, payments, wealth management, and the insurance sectors.
Apart from the affected people and deaths due to the virus, many countries have been hit worse in terms of unemployment and salary cuts. According to the International Monetary Fund (IMF), the global economy will shrink by 3%, and have also compared the impact to the Great Depression of the 1930s.
At present these situations may sound discomforting, but every news is not necessarily grey and gloomy. Among the many affected people, there has been a reasonable record of patients successfully recovering from the virus. The global environment has also improved, wherein a space agency recorded an amazing drop in pollution in the sky. As half of the world has been put under lockdown, many factories and industries have shut doors, thus making the air clean and unpolluted.
Looking at the brighter side, we know that few of the countries are emerging from the pandemic as the rates of infection are slowing down. Several companies are working towards a cure and we are sure to win the war against the disease soon. Moreover, many people have been helping the needy with food and basic essentials to tide over the crisis. So yes, we know that we will get through this.