We are all aware that the coronavirus is going to in some way create a lasting impact on the economy. Unemployment, falling prices of oil, salary cuts, are things that have already been happening, but what more is in store for us? And most importantly how much did economic deals have to do with the beginning of this pandemic? Let’s find out.
The Beginning
Well, let’s get to the beginning of the virus. Here lies one of the most important reasons the virus turned into a worldwide crisis.
- Speculations about a virus in Wuhan began spreading in late November, but everything was still hush hush about it.
- On December 15, 2019, the US-China trade bill (phase 1) was signed.
- In Mid-January a trade truce was signed among them, with an out clause that if there was any Act of God, Pandemic, then China would not have to fulfil the commitment of buying the promised goods from the United States.
- This infers that the Chinese did not let out the news about how harmful and large scale this virus was for the sake of a trade deal.
The World Health Organization (WHO) did not hold China accountable for this. The consequences of that trade deal are what we face today.This is where we see an economic aspect first coming to play with relations to the virus.
To know more about this be sure to check out the Interview of Danielle DiMartino Booth with Patrick Bet-David on YouTube.
The Present
- So what now? The virus has spread and is posing a threat to the world economy.
- Unemployment is peaking in. Already daily wage workers are out of jobs.
- A lot of employees are seeing salary cuts.
- In India, unemployment rose from 6.7% to 26%. When converted to figures and as reported, 14 Crore people have become unemployed during the lockdown.
- As of April 9, the Washington Post reported that over 17 million Americans have filed for unemployment benefits.
- While big businesses are managing in some way, small startups and small organizations are suffering.
- About 3000 Crore loss is what the Live Events Industry is facing.
- The prices of oil turned negative.
- Food commodities have started seeing a hike in price.
- Big shifts are seen in the stock market.
- The travel and tourism industry has lost an estimated 15,000 crore.
- The health sector is facing a crisis. While patients are being tested for the virus, other health care services are seeing reduction in use.
- The imposed lock downs, although necessary, can be seen as an economic issue.
Sectors that gained from this
- Shares of the video calling company Zoom have seen a rapid rise.
- Online video streaming companies like Netflix and Amazon Prime have seen new highs in terms of shares.
- The E-commerce sector has also seen an increase in demand.
Now what ahead?
- The world is likely to see a recession, and one that might resemble the great depression.
- China has been a manufacturing hub for the entire world. The current lock downs will have a negative impact and may cause scarcity of goods to the businesses and the companies all over the world, who source majorly from China and have failed to find an alternative.
- This not only applies to China, but also other severely affected countries that export goods that are essential to manufacturing units.
- Small businesses, small restaurants and other non-essential service stores may not have enough finances to continue functioning as usual. Many may have to shut unless proper aid is provided.
- The travel and tourism industry may see rampant unemployment until governments grant access and people are well financed considering the salary cuts and layoffs.
- A change will be seen in the spending habits of people, especially in countries where people have gotten used to living in a consumerist society.
The virus has acted as a catalyst in the economy that was already slowly crumbling. It is an event that is going to be remembered and is going to make us look at life and make decisions very differently. It is quite difficult to point a finger at where exactly the economy will lie, because we are still unsure how long the situation will last.
The question here is how did we reach this stage of a crippling economy, who is responsible for this and when will they be held accountable?
The current situation has left many of us worried and anxious. If you too feel this way, check out 10 ways that will help you manage anxiety.