When it comes to the current situation caused by COVID-19, the majority of people are concerned about two aspects – health and finances. Now, as far as one’s health is concerned, terrifying as COVID-19 situation may seem, in a matter of weeks or months the worst will come to pass. Once this is dealt with, the impending global economic crisis might be upon us. At the moment, a lot of people are losing their jobs, small businesses are shutting down and life as we know it is quickly transforming in a lot of places around the globe. However, what does all of this mean put together? Well, here are some estimates of the global economic impacts of COVID-19 that you may need to hear.
Manufacturing will take a hit
While a lot of work is migrating into the digital environment, the truth is that, when it comes to the manufacturing industry, it’s likely to get hit quite hard. A lot of people are getting fired all over the globe simply because their employers cannot financially sustain to keep them on paid leave while the factories are getting shut down. Seeing as how this also affects people’s purchasing power parity, the sales are going down, as well. In China alone, automobile sales sank by 80 percent. This is a definitive indicator and certainly not great news.
Also, the fact that some countries have closed borders to all but essential supplies (food and medical supplies), means that the export-import is going to take a huge hit, as well. In January and February alone, China’s export fell by a staggering 17.2 percent, which is more than a reason enough for one to be alarmed. How this will affect international trade after the panic surrounding COVID-19 is over remains to be seen. The only way to remedy some of these problems is to heavily invest in improved logistical solutions that will make this reduced number of trades more profitable. With adequate logistics management, such a thing can be achieved.
Tourism is getting hurt quite bad
The worst-hit of them all is probably tourism. You see, even in countries that weren’t hit as bad, tourist season is dead and gone. First of all, travelling abroad is definitely not recommended, especially due to the fact that most countries are imposing strict quarantine rules on those who are coming home from distant countries. Even those who wanted to travel are restricted by all sorts of emergency laws. Next, the majority of countries affected by COVID-19 have closed down the hospitality sector, which means that there are no restaurants, museums and landmarks to enjoy even for those who would decide to go on such a trip. Most importantly, with the instability of the global economy and impending problems with the job market, a lot of people are seeing tourism as a concern of pretty low priority.
Online businesses are on the rise
Not everyone is experiencing negative effects of the epidemic, seeing as how remote workers are now faced with an increase in workload. Even people who have never worked from home before are now forced to. The long-term effects of this on the future of telecommuting are yet to be seen. Employers all over the world are just now realizing the full benefits of the remote workforce. In fact, some of them are now seeing, for the very first time, that some of the posts they believed are on-spot-exclusive, can be done from home just as effectively. Even after the self-isolation trend is over, it is questionable whether these people will return to the office or keep working from home.
The energy demand
Another thing worth visiting is the issue of energy. First of all, there are news of ecological situation improving all over the globe. This is due to a lower traffic rate and the number of factories shutting down around the globe. However, fossil fuels represent a massive contributor to the global GDP, which is why this can also be quite alarming. Sure, people spend more time indoors, which is why average household energy spending is somewhat higher than usual. Still, this just can’t make up for the difference in the volume of energy spending. Also, a lot of people are getting more interested in the concept of solar energy in order to make their household self-sustainable in moments of crisis.
Investments and investing
Due to the fact that no one knows what tomorrow brings, there are a lot of people who are getting more careful with their money. This means that people are less likely to make investments and would rather hoard a bit of their own wealth for a rainy day (that now seems inevitable). Corporate earnings are also somewhat lower, which gives people one less reason to invest in stocks. Needless to say, all of this combined leads to incredibly low yields. The effects of this will be most notable on the examples of highly indebted countries and companies.
At the end of the day, the economic crisis is never a pleasant thing, however, with a solid economic program, the world may bounce back much sooner than some people expect it to. The biggest problem comes from uncertainty, which always increases market volatility. Also, due to the fact that China is already hit and that the United States is currently struggling, it means that the world’s two largest economies are already suffering. Unfortunately, this means that the rest of the world is likely to follow.