Economic Impacts of Coronavirus
Introduction
COVID-19 first case was confirmed on 31st December 2019 and since then-novel coronavirus has been the topic of discussion. The virus has not only affected the global community’s health matters but also, in terms of macroeconomics factors, financial markets and international trade.
In containment measures, developed economies like China, Italy, France, Spain, Japan etc. have locked down their countries adversely affecting the global supply chain. China has been the world’s largest exporter since 2009 accounting for 10.8% of the world’s total exports according to World Bank Statistics. The disruption in the supply chain will slump international trade and lead to shortages of inputs in the manufacturing sector.
Social distancing measures have led to reduced consumer traffic as people stay at home. This has reduced demand for goods and services leading to loss of revenues by the businesses affected. Social distancing, lockdowns and curfews have also lead to the closure of business and reduced operations for businesses adversely affecting revenues. The transport sector has been affected due to social distancing measures as vehicles are required to carry half capacity and as many commuters now working from home and others locked down in their homes.
Markets have been affected by social distancing as traders and their customers are required to maintain social distance. This has led to the closure of market places and reduced trading volumes in the markets. Market disruptions have also been contributed to by disruption in transport and supply chain locally and globally.
The international air travel ban has affected economies in two ways. First, loss of business for airlines companies. Second, the loss of tourism income as tourists are locked in their home countries. Mostly in developing countries, the tourism and hospitality sector plays a critical contribution to the economy.
These measures to curb the spread of the virus have converged to reduced economic activity in terms of businesses closures, operations reduction and change in business models have led to the loss of revenues and profits and consequently loss of jobs. The unemployment numbers have increased exponentially especially in the informal sector. The formal sector jobs have also been affected. Poor employment policies and lack of unemployment insurance systems in developing countries expose the workers who have lost jobs to economic challenges.
Data Sample to Be Used
International trade data
- Export data provide-19 and postcovid-19 from. Data collected from importers and exporters in developing countries.
Business activity data
- Data collected from businesses on their revenues/profits before covid-19 and during covid-19
- Data on the impact on businesses. Closed, reduced operations or donationbusiness model
Unemployment data
- Jobs before COVID-19 and during COVID-19 in all real economic sectors
- Unpaid leaves during COVID-19 in all real economic sectors
- Salary cuts during COVID-19 in all real economic sectors
- Jobs in the formal and the informal sector before and during COVID-19 in all real economic sectors
Tourism and international travel data
- Number of tourists before COVID-19 and during COVID-19
- Tourism revenues before COVID-19 and during COVID-19
- Jobs in the tourism sector before COVID-19 and during COVID-19
- International passenger numbers before COVID-19 and during COVID-19
- Jobs in the air travel sector before COVID-19 and during COVID-19
- Revenues for airlines companies before COVID-19 and during COVID-19
Summary
Economic Impacts of Coronavirus
In containment measures, developed economies like China, Italy, France, Spain, Japan etc. have locked down their countries adversely affecting the global supply chain. The disruption in the supply chain will slump international trade and lead to shortages of inputs in the manufacturing sector.
Social distancing, lockdown and curfews measures have led to reduced consumer traffic as people stay at home, closure of businesses and reduced operations for businesses adversely affecting revenues. These measures have also led closure of market places and reduced trading volumes in the markets.
These measures to curb the spread of the virus have converged to reduced economic activity in terms of businesses closures, operations reduction and change in business models have led to the loss of revenues and profits and consequently loss of jobs.
Responses by Governments Mitigate the Impacts
In addition to being a health crisis, COVID-19 pandemic has mutated to the global economic crisis. As governments and organizations respond to the health crisis, the economic recession should be a concern. To cushion citizens against the pandemic economic impacts, governments can respond in two general ways; Relief assistance and Recovery stimulus packages.
For the relief assistance package, governments can collaborate with the humanitarian assistance organizations, private sector and other organizations to expand and enhance the social protection coverage. This can be done through conditional cash transfers to most vulnerable groups like the urban poor, orphans, refugees and asylum seekers and more importantly workers who lost jobs due to the effects of the pandemic on businesses. Most of the developing countries do not have an unemployment benefits system. Through transfers of basic income, these beneficiaries will be protected against economic challenges posed by the pandemic.
In the recovery stimulus packages, governments should provide financing and improve liquidity to businesses to keep their operations afloat during the pandemic. This will improve their recovery rate and maintain revenue generations at levels that they will be able to meet operating costs including retaining workers. Governments can set up recovery funds where businesses can access cheap and easily accessible credit. This can also be achieved through collaboration with private-sector lenders.
Suitability statement
Sonata Consulting Ltd. is a well-established Management Consultancy, Research, Training and Capacity building firm established in 2009 and incorporated in 2011.
We continue to offer a wide range of research and management consultancy services and short and long term training and capacity building programs and research that taps into emerging issues like the Covid-19 and trends relevant to both public and private organizations. Our research and capacity building programs are well thought out and designed to allow organization flexibility in program content and structure.
We also offer issue-based research, general market, business research strategy development based on client’s needs. Our research services include Baseline Surveys and Studies, Feasibility studies and Impact Assessments, Employee Work Load Analysis, Job Evaluation, Customer satisfaction surveys, New product testing, Competitor analysis, Advertisement tests, Public opinion polls, Corporate environment and culture surveys and Communication audits amongst others. The firm since inception has carried numerous management consultancy services, training and capacity building programs aimed at enhancing efficiency and performance within the region for both public and private institutions and tackling a wide range of management issues ranging from strategic issues operation issues that taps into emerging issues and trends in the global dynamics. Sonata has a team of highly qualified and dedicated professionals with over 10 years cumulative experience with a richly diverse background in field research, data analysis and interpretation for similar assignments as this one.