- The central bank of the United States and other countries have lowered the interest rates so that people can have ease of borrowing and spending can be encouraged, which in turn will boost the economy.
- Airlines are at a higher risk to face even more losses until the situation is controlled globally.
- Restaurants and amusement parks are facing a huge decline in their sales.
The outbreak of coronavirus has affected thousands of people worldwide. This virus originated in China and has affected several other countries of the world. In order to control the virus, many countries are facing a serious lockdown situation that is adversely affecting the economy. In this article, we will see how coronavirus has affected the economy in different ways.
Stock Market Declines
The stock market got highly affected by this outbreak as investors got concerned by the disease rapidly spreading to other countries. Experts have reported a drastic shift in the stock market and saving accounts. It is due to the reason that the purchasing power of people has decreased significantly. To control this, the central bank of the United States and other countries have lowered the interest rates so that people can have ease of borrowing and spending can be encouraged, which in turn will boost the economy.
The Nikkei and the Dow, which are the stock market indexes have faced some serious decline. It has been reported that the Dow has faced the biggest decline occurring in one day, after 1987.
Growth Becomes Stagnant
The spread of coronavirus has become widespread and businesses have been shut down to overcome the difficulty. Thus, some employees are working from home, those who can use the online facilities and software, etc. Factory employees and other skilled labor whose work relies on machinery other physical tools are sitting at their homes, waiting for the situation to get better. Thus, businesses are facing a serious loss which will stagnate the growth and affect the economy.
Travel Is The Most Affected Industry
Many countries have announced travel restrictions to control the current scenario of coronavirus. This is due to the reason that passengers coming from other countries are bringing the virus along and then it spreads even more. Some airlines have canceled the tickets while others have changed the dates so that they can somehow manage the current situation and the impact on their business is minimal. Airlines are at a higher risk to face even more losses until the situation is controlled globally.
Similarly, tourism has been affected badly. Chinese tourists who use to visit the UK the most, have now stopped traveling. Research shows that around 415, 000 tourists used to visit the UK from China and spend around £1,680 each.
If this disease keeps on spreading, it is expected that the travel industry will face a serious setback. Employees will have to be fired and travel agencies will face huge losses.
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Manufacturing Of Goods Have Declined
Since factories in China are not operating in their usual way, manufacturing has slowed down. China stands in the list of one of the biggest exporters of goods and it contributes to around one-third of exports globally. The situation has also affected the supply chain of many businesses as China is unable to meet the demand due to the lockdown in the country.
Thus, not only in China but in other countries as well where goods are imported from China and then further refined to make different products, are now facing huge problems. Businesses are not producing the desired quantities due to the low supply of goods, shortage of labor, and unavailability of other resources.
The Service Industry Is Equally Affected
The impact of coronavirus has also affected the service industry. People have a lot of fear – they are sitting at homes because going to public places will increase their chances of catching the virus. Similarly, businesses have stopped operating in many countries due to the lockdown. Thus, the service industry is facing a serious downfall as well. Though this industry is not reliant on the import of goods, except for some machinery, it does need skilled laborers and has a high demand in any society.
For instance, Carpet cleaning Bromley reported that customers are not even coming to take back their serviced products. Thus, this is a period of recession and things will take time to come back to normal.
Declining Purchasing Power
Since businesses are not operating in their usual way, the purchasing power of people has declined drastically. Not only this, but people have a fear of hanging out in public areas because the virus is easy to catch from an infected person.
Restaurants and amusement parks are facing a huge decline in their sales. It was also reported that car sales from China dropped by 90% during the first week of February. Big companies like Geely and Tesla are now selling their cars online since customers are not coming to their showrooms. Some car manufacturers and smartphone industries also reported declining sales due to a major drop in demand.
Some Businesses Are Still Thriving
Though businesses have been negatively impacted by the coronavirus outbreak, there are some businesses that are making even more sales due to it. Reckitt Benckiser, which is a big name in consumer goods, reported an increase in sales after the virus became widespread.
The company reported that the demand for disinfectant products like Lysol and Dettol has increased at a high rate. Although it is not proved scientifically that these disinfectants can cure or prevent the spread of coronavirus, people are using them as a precautionary measure.
In short, since demand is lower and businesses have halted their operations, the economy is experiencing a downward spiral. Even the monetary and fiscal policies are not sufficient to deal with this situation. The impact on the economy is huge and it is expected that bankruptcy will increase in the current year.
In this scenario, when the whole world is trying to fight with Covid -19, employee safety is more important than business efficiency. No one knows how long it will take to control the virus globally, but businesses will keep on facing downfall until the disease is cured worldwide. Experts believe that it will take a year or more to recover from the current economic downfall.