The corona virus , which was first detected in China, has infected people all around the world. Its spread has left effect on businesses around the world counting the costs.
In this article we understand the corona effect on the world economy.
1. Globally Hit Share Market
Shifts in stock markets, where shares in companies are bought and sold, can affect the value of pensions or individual savings accounts. The Dow Jones and the Financial Time Stock Exchange (FTSE) saw their biggest quarterly drops in the first three months of the year since 1987.
According to Financial experts of KPMG, Lockdown in India will have a significant impact on the economy mainly on consumption which is the largest component of GDP.
2. Risk of recession
It is measured by looking at the percentage change in GDP, or the value of goods and services produced, typically over three months or a year. The International Monetary Fund says that the global economy will shrink by 3% this year. The IMF described the decline as the worst since the Great Depression of the 1930s.
Although it said that corona viruses had plunged the world into “a crisis like no other”, it expects global growth to increase to 5.8% next year if the epidemic spreads in the second half of 2020.
In the United States, the number of people filing for unemployment reached a record high, signaling the end of a decade of expansion of one of the world’s largest economies. Around a million people in the United Kingdom applied for unemployment benefits in just two weeks at the end of March.
In India although Indian govt issue lot of guidelines under disaster management act and not to fire the employees from there job but after lockdown all industries start production again then resuming of demand at the level before lockdown will take time and that time many of people loss their jobs for the time.
Online Food Delivery Business :
also get affected and resulting to reduction in demand home delivery food and many of delivery boys will lose their jobs.
4. Use of Technology
Companies related to technology will get new opportunities. In Near Future Online meetings , Classes, Study rooms, E Books will become popular after corona.
Zoom Video Calling and meeting More Popular
Governments around the world have urged employees to work from home where possible. Shares of technology companies such as Zoom have shot up as more people rely on video conference calls and emails to conduct meetings or receive tasks.
The demand for online shopping and entertainment has also soared as people stay indoors. Online Study and Classrooms are developed by many schools, institutes and study with technology is now become part of life.
Online Content Platforms
During the lockdown period in india as well as whole over the world, online content selling platforms get millions of downloads and subscriptions.Amazon’s share price has seen a new surge, while streaming platform Netflix was at one point a more valuable company than oil giant Exxonboil. Increased Demand of these type of platforms will benefit to Technology companies and Content selling companies. In the near Future it may be possible that new companies will also came into this market.
5. Hitting to Airlines Companies
The travel industry has been severely damaged, with airlines canceling business trips and holidays to flights and customers. Governments around the world have introduced travel restrictions to curb the virus. High maintenance of aircraft, Interest cost and salary to staff during lockdown will result of huge losses in the profit and loss accounts and it might possible that few companies become bankrupt if govt not announce any relief to industry.
In Future we will see that travelling for business tour will reduced and online meeting will held for next few years, it will also affect the technology and airlines companies.
6. Oil prices crash
The demand for oil has been met, but people have dried up due to the lockout worldwide. The price of crude oil was already affected by a row between OPEC, the group of oil producers and Russia. Coronavirus has driven the price down further. Brent crude is the benchmark used by Europe and the rest of the world. Its price dropped below $ 20, the lowest seen in 18 years.
In the United States, the price of one barrel of West Texas Intermediate (WTI) became negative for the first time in history.
7. Effects of lockdown on Enviournment
Many countries and world capitals have been placed under strict lockdown, stalling major industrial production chains. The European Space Agency and NASA has registered an impressive fall in pollution across the European skies. The images clearly show that a strong reduction in emissions is now in major cities across Europe – most notably in Paris, Milan and Madrid.
A similar trend has been detected in industrial centers in India, where strict lockdown measures have been put in place since March.
8. Production Slowdown or Shifting From China
In China, where corona viruses first appeared, industrial production, sales and investment all fell in the first three months of the year compared to the same period in 2019. China manufactures one third globally, and is the world’s largest exporter of goods. Shops and car dealerships have all fallen in demand. Chinese car sales, for example, fell by 48% in March.
Mobile ,textile and other industries are also Planing to shifting from China. Many of Countries like S. korea, Japan, USA are Planing to shift their production out from China. Few of Countries are already issue instruction to their companies to shift from china and for this countries are also giving special package. It will open new Market for India and job opportunity for citizens. In Future India became establish as new Production hub in Asia.
9. Tourism & Hospitality Sector
Due to pandemic of this virus governments of many countries may introduce few new rules for landing tourist in their country for the time being. As the world know that the virus spread from china and their are no vaccine yet, so it also might possible that in future countries introduce thermal scanning from everyone who is coming from other country. After this corona era we can expect that people love travelling will also ignore travelling and staying at hotels for next few months or years. This will defiantly affect tourism and hospitality sector for next one or two years.