Friday, 17 April 2020

Impact of Coronavirus on Economy


Coronavirus outbreak has certainly effected the human life more than we could imagine. However, the impact of the same is far deeper on our economy which could surface in days to come. As per the UN conference on Trade & Development, the pandemic outbreak could result in the global economy taking a hit of about US $1-2 Trillion in 2020. Here are a few industries that are experiencing the consequences of the Coronavirus outbreak. 
 - Share Market Taking a Hit: 
Investors have certainly been extremely concerned consider the current situation in China and other countries affected by Coronavirus. As a result of the same, big movements in stock markets were observed affecting overall investments. Dow Jones saw its biggest one day low since 1987 in the second week of March'20. India’s NSE & BSE saw major fluctuations and fall as the investors are kept on the edge looking at the present situation in India. Singapore, 
Japan, Australia, and New Zealand stock market had similar stories. Undoubtedly, this explains the overall impact on the global market cap. 
  • Aviation:
As of 6th March’20, 585 international flights were canceled by private carriers. The International Air Transport Association (IATA) has estimated that the airlines could lose up to US $113 Billion in 2020 because of the Coronavirus crisis. Indian Government has suspended almost all visas for a month with effect from 12th March’20 in response to control the spread of Coronavirus, adding to the crisis faced by the airlines. Further slump is anticipated in the domestic air travel for the next couple of weeks. 
  • Hospitality:
With almost all the corporates has restricted the travel unless essential, business hotels in most of the major cities are expected to have a lot of empty rooms. The coronavirus scare has led to an exponential rise in usage of VC tools eliminating the need to travel for meetings etc. Leisure traveling is off the cards for time being, the hotel industry is expected to observe more than 50% fall in the occupancy rate. With an increase in awareness, people are taking precautions by self-quarantining themselves, the restaurant business is experiencing a fall of about 45-50% in the overall business. India has imposed a ban in a few states on theaters, multiplexes, and malls. It is expected that the hospitality industry will see about a 50% fall in the business. 
  • Global Value Chain: 
Global trade has been hit very hard as the aviation and shipping industry have trimmed their operations due to coronavirus outbreak. Import / Export restrictions have only made things worst disrupting the global value chain essential for economic growth. The deficit in manpower and quarantine procedures is impacting productions and shipping worldwide. With the cargo ecosystem paralyzed, the global supply chain seems to be disturbed impacting overall sales. For instance, India exported garments. Poultry & Seafood worth more than INR 1 Lack crores respectively in 2018-2019 with Europe being one of the most prominent importers of the same. With the current situation, the overall sales in Europe have declined sharply due to the self-quarantine situation along with trade restrictions that have brought the exporters to stand still. Similarly, India imports 45% of its consumer electronics from China. With China shutting down its manufacturing and trade has hurt the demand in India. The current situation on the outset had created a much deeper impact on the global economy with the experts only trying to evaluate the time it would take to the economy on the path of recovery once the coronavirus fiasco is over. 

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