Covid-19 has become one of the biggest threats to the global economy and financial markets. “The more time we are spending in this quarantine and waiting for the pandemic to get over, the more we are going back in time.” Each and every country affected by the out-break of Covid-19 are experiencing a huge economic downfall!
International and national organizations are planning ways to tackle this economic recession of 2020. UNCTAD has said that the economy has envisaged a slowdown to under 2% this year, which costs up to $1 trillion. With the world economy at risk the GDP is growth is projected to drop to 2.4%. To curb and minimize the economic loss the G-20 leaders have mutually pledged to put in efforts with whatever resources are available.
The global market has been under pressure and uncertainty since the break out Covid-19. This pandemic has hampered almost one-third of global market value. This scenario has created doubt in minds of many investors on buying shares. Adding to this are the earlier international political rivalry between various countries in terms of trade which is piling up to this economic crisis. The uncertainty of oil prices and disrupted supply-chain by China have contributed majorly to the concerns of global market. It has also affected the currency exchange rate on global level as pound is under threat!
The coronavirus scare has imposed a drastic imbalance in the supply and demand chain, it has become very difficult for companies to cope with the adverse economic effects.
Ever since the rampant spread of the CoViD-19, the industries have been facing multiple major issues and as each industry is facing (and dealing with) it differently, let us vaguely traverse each one of them.
Firstly, we have the sanitation industry which has been overwhelmed due to the coronavirus scare to observe a huge rise in demand. On the other hand, supply has been stopped in most places and greatly reduced in others due to the imposed quarantines. Since the major distributors have stopped manufacturing and supply, the local companies have now risen to the occasion and started distributing and providing their products! This has given the local companies a chance to grow within their reach.
The entertainment industry is now dealing with at least seven times the usual customer base since each person has been consuming various kinds of media during quarantine. The telecom industry is also submerged in large pool of users they are now having to serve to. The recent expansion of the 5G network has been stopped in various countries due to quarantines. This barrier in the 5G expansion has caused the telecom companies to lose their customers who relied on the company to expand in the realm of 5G.
The hospitality sector is staring at a loss of $4.2 billion to $4.7 billion in revenues due to coronavirus outbreak. That is almost 25-30% less revenue compared to the previous year. As people have become cautious about their health, the hotels have experienced a decline of 30-35% in their business. More-over, 30% fall has been reported in demand for poultry in the last three weeks. Amongst this the delivery segment is facing the least decline.
The IT companies have established a work-from-home scheme along with most other companies that do not require the employees to be in the office for them to complete their assignments. This enables them to generate revenue in spite of a complete nation lockdown. Almost 85% of TCS employees being from India or on shores are working from home.
The manufacturing and production companies in various domains like technology, packed food and many more have come to a halt completely and can only resume their work after the pandemic fades. General Motors, Ford and Tesla in the US have all pledged their support to offer resources to make more ventilators, along with Japanese carmaker Nissan and Formula 1 teams in the UK.
Aviation industry has cancelled 585 international flights and have stopped the production. Clearly they have to resist this economic turbulence and come up with a solution. India’s largest airline, Indigo, has reported a 15-20% decline in the business.
Even if India successfully manages to contain and stop the spread of Covid-19 and escapes the worst of the outbreak, it would still likely deal with the effects of financial hemorrhage and trade disruptions across the world. If the rupee continues to fall down and weaken, firms dependent on foreign loans could struggle long time. Firms dependent on foreign supplies have already been hit, with imports declining very sharply last month.
In the meantime, all the people in the world need to realize the severity of the situation and should stay safe at home following the rules of social distancing. This pandemic could or could not result in a recession but the best thing you could do by staying home is finding a solution to a problem and make a plan to manage your finances in ways which could minimize your losses.