The COVID-19 pandemic which originated in Wuhan, China, has spread across 212 countries around the world as of now. More than 4 million active cases have been reported globally and over a quarter-of-million fatalities have occurred. Countries have imposed various measures to fight this virus outbreak, but a huge economic downfall globally has been observed alongside. Let’s look at some of the key impacts of the novel Corona virus on the global economic front:
Increase in Unemployment Rates:
The unemployment rate in the United States has risen to 14.7%, with 20.5 million jobs lost in April. The CNBC has predicted that the Corona virus outbreak can cause the highest unemployment rate in the history in the United States. It could lead to a greater shock than the Great Depression of 2008. The economic crisis is not limited to the US. The Bank of England has predicted a sharp recession in the UK. Meanwhile, Canada has reported its unemployment rate increase by 5.2 percentage points to 13% last month.
Shift in the Stock Market:
The market has become volatile and particularly dangerous for individual investors. Multiple factors together have brought about bad investment decisions by retail investors. Easy access to high-risk markets, the appearance of zero-cost investing, high levels of credit extended to traders, and an absence of other outlets for high-risk investments have all led to a situation where many retail investors are facing heavy losses.
Crash of Oil Prices:
As people stay inside their homes, the demand for oil has declined significantly. The pandemic has acted as a catalyst to already falling oil prices. Brent crude, the benchmark referred by Europe and the rest of the world, its price dropped below USD 20, the lowest level seen in last years. In the United States, the price of a barrel of West Texas Intermediate (WTI) turned negative for the first time in history dropping to as low as negative USD 37.63.
The IMF has predicted a decline of 3% in global economy, as the production of goods and services globally has taken a hit due to Corona virus. GDPs of major economies such as Canada, China, USA, France and Germany are all expected to decline as per predictions of IMF. It is the worst decline since the Great Depression of the 1930s.
Impact on Travel Sector:
The Tours and Travel industry has been severely hit, with airlines stopping flight operations and customers forfeiting trips and holiday plans. Moreover, governments all over the world have imposed travel restrictions, in order to contain the virus.
Decline in Industrial Production:
Restrictions imposed due to Corona virus have affected the supply chains of large companies globally. For instance, in the automobile industry, shops and car dealerships have all reported a decrease in demand. Chinese car sales, decreased by 48% in March. Moreover, carmakers, like Tesla or Geely, are now switching to online platforms as customers stay away from showrooms.
Ways for businesses to survive:
For the future, businesses need to make focused strategies and implement them efficiently to survive this global economic crisis due to COVID-19. Some useful tips for the business can be: – Effective communication with your clients and customers – Maintain healthy business relationships up and down the supply chain – Maintenance of employees and optimization of salaries – Promote engagement among employees through online platforms – Transparent communication with stakeholders – Expansion to new sales platforms, both online and offline, to maintain the reach to customers