The 2019/2020 Corona Virus Pandemic has already created a major shift in the world economy, even with efforts being made to minimize its spread.
Panic buying, staff layoffs, canceled flights, overwhelmed hospitals, and thousands of deaths are some of the consequences of the Corona Virus Pandemic.
By now, you sure know the Corona Virus symptoms and how to avoid catching the flu. In this post we present the business impact of Covid 19 virus.
Here is an overview of the top 7 economic and business impacts of this viral disease.
1 Declining Oil Prices
With news of the Corona Virus Pandemic everywhere, one major sector that’s affected is the oil industry.
Oil prices have dipped by almost 25% and this is considered as one of the worst record lows. Experts are predicting one of the biggest collapses in terms of demand.
Currently, one barrel is below $30 and with the duration of the pandemic being unknown, we can only predict the worst.
Travel restrictions and lockdowns have brought the world to a standstill. This has created a massive oversupply that has in turn affected barrel prices.
With oil being a huge factor, you’ll agree that the business and economic impacts of the Corona Virus Pandemic are far-reaching.
2. A Highly Volatile Stock Market
With oil prices plunging, the stock market has also been dragged down, especially in the US, Asia, and Europe.
In New York, for instance, stocks plunged close to 2000 points just a few minutes after it was opened.
This resulted in trading getting closed briefly and even after the market was opened, trading was still low.
Over the last few weeks, stock markets have been extremely volatile with very few of them making noticeable gains.
Even with massive coordinated efforts throughout the world, generally, the global stock market has remained down.
The coronavirus pandemic made president trump to announce the possibility of a recession. It should be noted central banks have been forced to step in and calm investors as well as to provide fiscal support.
For instance, both the Bank of England and Japan have promised to safeguard financial stability while closely monitoring the situation.
The US Federal Reserve has also reduced interest rates by 50-basis points, ranging between 1% and 1.25%.
Economically, the coronavirus pandemic is extremely contagious, as its aftershocks are still being experienced intensely in different parts of the world.
For now, we can just wait but the fear of a looming recession is at an all-time high.
3. Economic Decline/Stagnation
If industries and markets are making major losses, then this will definitely lead to a decline in the economy, globally.
When the economy is growing, it means that there are new jobs being created and more wealth is generated.
At the moment, some of the biggest companies are laying off staff or requesting them to take unpaid leave for an unknown period.
Manufacturing industries have closed down their premises as workers are told to stay at home.
With the loss being experienced in all sectors, it will take months for the economy to pick up. Organizations are currently trying to find ways to stabilize losses which is impossible.
Even after the Corona Virus Pandemic is over, there will be a period of transition that will be characterized by economic stagnation.
This is because industries will still need to come in terms of their losses before they can begin to make profits again.
4. More Cashless Payments
The Corona Virus Pandemic has been spreading quickly due to its highly contagious nature. The virus can remain alive in objects and surfaces (including money) for days.
To reduce the severity of their effects and the number of new infections, organizations are advocating for cashless payment options.
The World Health Organization has recommended that if it’s possible, consumers should use online or mobile payment systems.
Although there are countries that have started to quarantine cash, this takes longer and people still risk exposure.
In this period of Corona Virus Pandemic, cashless payments may be great in sustaining part of the economy.
At least it allows consumers to still spend without the risk of exposure to the viral disease.
It also reduces the production cost if paper currency and coins, helping governments to save more money than they so much need.
5. A Reduction in FinTech Funding
While the total FinTech funding has been significantly low, this condition is expected to prevail for a long time.
As stated above, the Corona Virus Pandemic has negatively impacted the growth of economies. The impact of coronavirus is massive and it’s not known when it will officially end.
Investors are now more concerned about their safety and the impact of the declining economy on their finances more than anything.
With ongoing uncertainty coupled with fear, venture startups should expect a long dry spell for the remaining part of the year.
6. Interruption of Supply Chain
The economic and business impact of the Corona Virus Pandemic is all related.
First, there was a lockdown in China and airlines had to stop flying to stop flights destined there. With the lockdown, this means that factories also closed down.
This effect has been replicated to most countries, especially those with a massive number of patients.
Without employees, industries had to seize operating. Without a functional transport system, there is no way products would be supplied.
Even with governments advocating for people to work from home, this is only possible for a few industries.
The supply chain has been affected to a greater extent due to the lack of personnel, shipping companies, and products.
7. Growth in Digital Advertisement
With many sectors getting negatively impacted by the Corona Virus Pandemic, one industry that’s thriving at the moment is the digital ad platform.
Companies are now turning to the e-market to advertise their products and services.
Forecasts indicate that this sector will experience roughly a 7% increase in spending, globally.
The biggest beneficiaries of the Corona Virus Pandemic are social networks as well as streaming platforms.
Besides that, internet providers are expected to earn a big chunk of money as most things are now being done digitally.
Conclusion on Economic Effects of Corona Virus Pandemic
The Corona Virus Pandemic has been a huge wake-up call. The world is now focused on only one thing, how to stop its spread and find the right vaccine.
Economically and businesswise, the first quarter of 2020 has been affected significantly.
The pandemic has resulted in mixed feelings and it will definitely lead to changes in the future, especially regarding health, climate, business, and the economy.