With the ongoing outbreak of Covid-19 Coronavirus, everything around the globe is getting affected. After the uprising of coronavirus, the global economy has come to a halt and it is the biggest threat to the global economy at the moment. You can say that this situation is slightly similar to 2008’s financial crisis but it is having more drastic outcomes. Businesses are facing revenue losses because of disturbance in the supply chain as almost all the factories in China are shut down.
The shortage of parts and other related products is causing a disruption to commerce. Many big industries like Nissan and Hyundai have temporarily closed their factories. Even Apple is facing production delays due to the closing of its manufacturing partner Foxconn in China. According to economists, almost 4 million jobs were lost during 2019 and this year isn’t going economy too well also in the first quarter of 2023 China’s growth experienced a decline of 4.5%.
The COVID-19 Pandemic
The coronavirus effect is spreading far beyond China now The situation is becoming worse as the US closed its airports and Italy is under complete lockdown. The oil prices have lost almost a third of their value this is the lowest fall in oil prices ever since the gulf war. There has been a massive drop in oil demand globally. The biggest importer of oil was China and because of coronavirus, its industries are shut down resulting in a decline in oil usage.
Another basic reason behind the decline in oil consumption is the traveling restrictions imposed by many countries on their people. Because of travelling restrictions, the airline industry is going to suffer a loss of $113bn in their revenues. The air travel industry is one of the most affected industries by the corona virus’s outbreak. With the increase in a number of cases, the travel restrictions are increasing day by day. Not only people are avoiding traveling but because of coronavirus, there is a major decline in the number of tourists all over the world which is going to affect the travel industry on a large scale.
The Affects of COVID-19 Pandemic
The stock exchanges all over the world are facing a great decline. Investors are reluctant to invest as the situation is getting worse day by day. By the end of February, a major shift in the stock markets was seen which is the worst ever since 2008’s financial crisis. However, the US and European stock markets have slightly increased. The countries are taking measures for protecting their economies in this drastic situation. The central bank of the US reduced its interest rates as a response to the public concerns making borrowing cheaper. Coronavirus will cause more damage to old and mature economies like the US then it did in China.
Mature economies depend on the service sector and as a result of the coronavirus pandemic people will be retained in their homes so their economies will suffer gravely. According to one economic expert, the economic loss faced by the US due to coronavirus outbreak will be much worse than China because in countries like the US face to face services that involve the daily interaction of people are more when compared with China.
Alone in the US on average an American travels three times by year in one year. Almost 11.5 million Americans take cruise vacations every year but now after the sad incident of the Diamond Princess people are less likely going to take cruise vacations. People in America spend a huge amount on sporting events but because of this ongoing pandemic, all public gatherings will get postponed. On average every year 60 million Americans spend almost $19 billion on gyms and because of the corona, they’ll stop going to gyms. All these events will cause a tremendous snag in the domestic economies as well.
On the other hand, a rapid increment was seen in shares of companies that produce hand sanitizers, disinfectors, soaps, and insecticides. The prices of gold are also increasing.
What Should be done
However, in the current ongoing chaos, we recommend that everyone should install mobile phone tracking & monitoring apps like the mSpylite which helps you in getting updates of your loved ones. Everyone should take basic precautionary measures to keep themselves safe from covid 19 coronavirus.
These are some of the steps that countries whose economies are mostly affected by coronavirus should take to help people:
- Firstly, additional financial aid should be given to the health services which includes supplying sufficient resources which will ensure an adequate supply of staff, test facilities, and other mitigation measures.
- Governments should take measures to ensure Short-time working schemes, where flexible working hours will be available for the workers. This will help in providing a little bit of financial support to the workers.
- Governments should try to give confidence to businesses that things will get fine and back to normal soon.
- Invest more in public health sectors.
- The government should give financial support through stronger public investments on low-interest rates to the social groups and businesses suffered by a coronavirus.
- In short, monitoring adequate liquidity in the financial system is also important. It will help banks to provide financial aid to companies that are facing cash flow problems.
- Governments should also provide financial support to service industries like travel and tourism. These are the industries that faced the biggest downturn due to the coronavirus outbreak.
- Lower policy interest rates and strong spending by the governments will also boost confidence in the suffering industries.
To sum it all up, with the ongoing global health crisis the world’s economy is suffering a lot. The effect of coronavirus on the global economy will cause more damage in the future than it is doing at the moment. The disruption in the global supply chain will have a much longer-lasting and deeper impact on the global demand chain in the near future. At such a time of crisis, we all should focus on taking all the possible precautionary measures that will ensure yours and your family’s safety.