The effect of Coronavirus impacts around the world is witnessed by all of us. The deadly virus that originated from Wuhan China has now taken over the world. The spread of this pandemic was soquick that within a time of a few months it has affected more than 188 out of 195 countries of the world. That means only seven countries are free of COVID-19 virus.
Even the most developed countries like Norway, Australia, the USA, Japan were affected badly with the Coronavirus impacts. Most of these countries imposed lockdowns to save their people from getting affected. But this made a huge impact on their economy. Several businesses either have shut down or are at huge losses. Thousands or millions of people have lost their job or have reduced payments. Although the lockdown has eased in many countries, the battle against viruses and the economy continues.
Here, in the article, we tell how the virus has hit the global economy, and how people are coping with it.
Current status of our world and economy Due To Covid-19
Unemployment is at its peak
The current coronavirus crisis has tremendously affected the employment rate of both developed and developing countries. Hundreds of millions of people are left jobless. Developed countries are among the highest affected ones. In the USA 10.4% of working people have been affected. In Italy, the rate is 12.7%, Canada 7.5%, Germany 3.9%, and Japan 3% respectively.
The International Labour Organization made an estimated report on people losing their jobs due to pandemic. According to the report 23 million people can lose their jobs in a month. However, the report also showcased a smaller rate of job loss of 5.3 million, this possible if countries coordinate with international policies.
ILO has called for urgent and large scale measures for three pillars that include protecting workers in the workplace, providing support for jobs and incomes, and employment and economic stimulation.
The government of many countries is trying to ease the situation with job retention schemes. Millions of workers are now using these schemes to survive crises, like the travel and clothing industry.
The worldwide lockdown to prevent viruses has badly stuck the travel industry. Not only the holiday plans are canceled but the possibility of trips in the near future is very less if not zero.
Even though there are so many advanced travel modes available, everything has still come to halt due to a deadly virus.
Tourism both domestic and international is a significant part of a country’s economy. Government measures on travel restriction to control viruses have taken a toll on travel business as well as the country’s major economy. With each passing day the travel industry is sinking with loss and unemployment.
As flights are the major mode of transport, it has also suffered massively. According to ‘Flight Radar 24’ a flight tracking service, many Airways of the world have suspended their employees or have provided them with less paychecks. One such example is of British Airways that suspended its 36000 employees in the month of April. The World travel and Tourism Council (WTTC) revealed that the tourism sector alone faced 100 million job losses due to pandemic.
After months of lockdown, many countries and states have controlled the spread of viruses to some extent. So the flight industry, mostly domestic, has started to function in several countries. The number of passengers on any flight is less than half of their limits. A small flight with a capacity of 40 passengers, is now taking off with hardly 10 passengers on it. The number of flights taking off are still very less than earlier. As the U.S Airlines is taking off less than half of its flights, over 3000 planes remain parked.
Airlines are taking all necessary steps for virus prevention for passengers as well as employees. By putting on tabs and marking floors they ensure that passengers are maintaining 6 feet distance from each other while in waiting lines.
At Airport terminals sneeze guards are seen separating employees and customers. Customers are asked to scan their boarding passes on machines so the employees don’t have to handle documents. Also, there is the restriction on jet bridges that allows only few passengers to pass at one time as per social distancing rules.
Risk of Recession
In simple words, economic growth means more wealth and more jobs. It is calculated as the change of percentage in gross domestic product, goods or service produced over three months or one year.
The coronavirus has not only halted economic growth but it has brought recession to the world like never before. Recession is a period in which economic decline is witnessed that includes the reduction of trade and industrial activity. This period is generally identified when there is a fall in GDP for two successive quarters.
According to the International Monetary Fund-IMF, the world economy will fall down upto 3% this year. This is the worst economic decline in history which is even greater than that of the 1930’s Great depression. But this is not the worst, according to the Economist Intelligence Unit EIU- there is a possibility of a greater downturn. Governments of the world are spending trillions of dollars in stimulus packages to save their countries’ economies.
EIU has warned the world that rising Sovereign debts can lead the global economy into a second recession. The EIU’s global forecasting director stated that several European countries in the category of worst affected with covid-19 like Spain and Italy had weak fiscal positions even before the pandemic. So, if any of these countries face a potential debt crisis, it will reach other developed countries and emerging markets within no time. This can lead the global economy into a greater fall.
Slow recovery: Even if social distancing is removed, the situation will not immediately shift back to pre-pandemic level. Consumer demand will recover slowly and gradually. Also Global chain can remain disrupted according to EIU because of the bottleneck created with different countries removing lockdowns at different points in time.
Great losses in Oil Market
The pandemic has plummeted the oil market across the globe. The main question here is how much the virus has affected the market and how long will it continue? The oil market in the world is affected majorly for two reasons, first is the restriction on travel that causes limited use of jet fuels and slow supply chain. Workers from industries are sent home which means that not only oil is used less but also produced less. This directly affects the consumption of oil and hampers the calculation of oil demand.
Now the second reason for the oil market to suffer losses is stock market reaction to covid-19 on the global economy builds a projection of global oil demand over long-term.
Before the virus, crude oil prices were lowered due to the dispute between Russia and OPEC-The Organization of the Petroleum Exporting Countries. The pandemic has sinked the oil prices even further.
The price dip of the benchmark crude oil used by Europe and also globally has fallen below $20. This is the lowest price Brent crude recorded in the last 18 years. The hope is not lost, recently prices were regained upto a certain extent, as travel restriction is uplifting in many countries.
Impact of Covid-19 on Pharmaceutical companies
Many Pharmaceutical companies of the world are experiencing major growth because of Covid-19. In India, panic buying resulted in 8.9% growth of the pharma market in the chronic category for the month of March alone.
But like any other sector, the pharma sector has to face consequences. The lockdown in countries like India, China and the USA can cause a hike in the cost of drugs and raw materials. According to the FDA, 13% of raw materials of drugs including brands as well as generic manufacturers is based on China in 2018.
India exported 31% of media ingredients and 24% of medicines to countries like the United States. The cost of medicines was almost doubled, for example, the cost of paracetamol in India earlier was 200 to 250 Indian rupees per kilogram which is now between 400-440 Indian rupees for one Kilogram.
The supply chain for medicines is quite delicate and the deadly virus has once again brought it to notice. Medicinal drugs can be categorized in two categories- first is Brand name drugs, these products come under a reliable supply chain and also cater profit to manufacture. The second category is Generic Drugs which on other hand have lean supply chain and marginal profit. The API plants for these products are found overseas, which is dominated by Asian countries like India and China.
The worldwide lockdowns have made shoppers stay home, which has caused tough situations for retailers, the situation is especially tough for clothing retailers. According to British Retail Consortium-BRC, The UK faced 5.9% of sales drop compared to last year. On the other hand, online sellers of non-good items received a sales jump of 60.2%, however, there is still a drop in spending on High Street.
Although there was a drop in overall retail sales, sales in food items grew by 8.7% in the month of May. A substantial rise was also seen in office supplies sales, fitness equipment and baby products. Whereas non-essential sectors like fashion, beauty, home furniture continued with less user demand.
Even if the lockdown in many countries is removed or will be removed, the rise of retailers will be slow and gradual. People will hesitate to go for shopping and will follow social distancing norms.
The whole situation of Coronavirus shows us how human beings are helpless against mother nature, even with the tiny virus that originated from an animal can be a terror to every human being on earth. Every country in the world is now in the process of manufacturing vaccines to cope with the virus. However, we have to do our share and be cautious about our health and lifestyle. We need to make constant efforts in eating healthy food and at the same time use nature wisely.
Author Bio: Pooja shah
Bio: Pooja Shah is a Content Writer at Financesage. It is a blog where I cover financial tips related website which is working towards investors to take better financial decisions and make the best choices while buying financial things and for better financial life.