Global uncertainty: The economic fallout from coronavirus
Over the past several months it seems like the whole world got turned upside down. No one could’ve expected nor predicted a global pandemic outbreak, and we were simply not ready for it to happen. COVID-19 virus has influenced every single aspect of our lives and still is, as most of the countries are in a national emergency state and a lockdown. Businesses are closing, many people have lost their jobs and financial stability in these unfortunate times. The world market is changing on a daily basis and there is only one thing we can say for sure – the effects of the pandemic on the global economy will be long-lasting.
Tourism and Travel Industry
Some of the industries are suffering more than the others, and it is quite logical that the most affected ones are related to tourism and traveling. Countries all over the world were gradually announcing the lockdown state, meaning traveling and movement restrictions. Prevention is the best medicine, they say, but this is what happens when we are not cautious enough and take important aspects of our vulnerability for granted. All movement that is not absolutely required is banned. The very fact implies tremendous suffering of airline companies, hotels, cruises and everything else related to this line of business.
The battle is World vs. Virus, so everyone needed to comply to new regulations – no flights, no vacations, no group gatherings etc. which for the industry means no profit. The World Travel and Tourism Council has stated that Asia is impacted the most, which also makes sense. As the virus has originated there, people will surely be reluctant to go on a vacation for a while after things get back to normal. And that new normal won’t be the same as before the outbreak, in an economic sense, but also in terms of people’s mindsets. It is predicted by the Council that it will take up to a whole year for the tourism industry to stabilize again. Just to put things into perspective, ten percent of global GDP and the number of jobs is accounted to this industry.
Global Supply Chain
Another thing on the world market that is deeply affected by the pandemic is no doubt the manufacturing industry and the whole supply chain. Everything is connected, so this is only a consequence of other government bans, including the traveling one. Manufacturing has been reduced as many industries have been temporarily closed, so the whole supply chain is disrupted. We’re used to everything being available on a global market level, and many companies rely on manufacturing and getting supplies from China. Even the largest corporations such as Amazon and Apple have stated the concern that they simply won’t be able to import enough inventory.
It has never been clearer how even the largest networks operate in a chain reaction. This disturbance is on the very bottom level and it will change the world’s schedule. Some of the companies were prepared and had a backup inventory and other plans. But unfortunately, we’re talking about the minority of cases. It is extremely hard to stay objective in the situation where you’re already losing profits. Therefore, it might be time to get some help in the logistics part. It is highly recommended investing in the national 3pl services, to help you organize your inventory and revaluate your shipping methods, distribution and transportation services. This applies especially if you’re closed for business and have an excess of inventory. So, finding a third-party logistics facility should be a top priority!
Everyone is wondering whether or not the recession is to follow. The most frightening part is that we have no idea how will the crisis unfold, and what will the economical result be at the end of a pandemic. Stock prices are fluctuating, but at some point, there has been a twenty percent descent. Not even the experts know what to say, or anticipate the following steps. So, basically, everyone owning stocks is now playing a guessing game with the outbreak spiraling for months. For this reason, people have started shifting to different sectors, especially those benefiting from COVID-19, such as the pharmaceutical industry.
On the other hand, we have the lowest price of crude oil in the past eighteen years. The oil market is suffering tremendous losses. The travel industry is on hold, hence the oil demand is at its lowest. Many other industries that use oil have reduced the activities or completely stopped them. So, less oil and oil-based products are both produced and used in general. There is a prediction that the price is only going to continue to decrease. Some analysts claim the OPEC problem will turn out to be the biggest problem in the world market. It seems the world is on hold, and life is paused. Long-term economic outlooks are not clear. It will take a while to understand the consequences, not even to mention act in accordance.
The above-mentioned are just some of the most important aspects of how the world got disrupted by the pandemic outbreak. Various other smaller industries have been affected, and all the predictions we make carry a heavy load of uncertainty. The threat is a deadly virus, and the consequences are yet unknown. Luckily, it’s the 21st century, so technological advances will allow us to handle the issues in the best way. However, for us to even start dealing with those, it is necessary for this pandemic to end. But there is still so much we don’t know about COVID-19, therefore the uncertainty. We can only hope to strategically, and in unison approach the situation when the pandemic is contained.