CORONAVIRUS COSTS TO BUSINESSES AND ECONOMY
CORONAVIRUS COSTS TO BUSINESSES AND ECONOMY-
The Coronavirus outbreak is first and foremost a human tragedy, affecting hundreds of thousands of people. It is also having a growing impact on the global economy. The outbreak of COVID-19 highlights cracks in global trust, the pitfalls of global interdependency and the challenge for global governance. Epidemics are both a standalone business risk and an amplifier of existing trends and vulnerabilities.
More than 140 countries and territories have reported cases; more than 80 have confirmed local transmission. Even as the number of new cases in China is falling (to less than 20, on some days) it is increasing exponentially in Italy (doubling approximately every four days). China’s share of new cases has dropped from more than 90 percent a month ago to less than 1 percent today. India locks down over 100 million people amid coronavirus fears. Authorities in India have placed at least 75 districts across the country under stringent lockdown "State governments will issue orders allowing only essential services to operate in about 75 districts with confirmed COVID-19 cases or casualties," Indian Railways, which carries more than 25 million commuters a day, cancelled all passenger train services until March 31. Incoming international flights were already barred for a week, while schools, entertainment facilities and monuments such as the iconic Taj Mahal have been closed.
As the outbreak forces the cancellation of trips, night outs and large gatherings- economic damage is mounting across the globe. Economists estimate 4 million jobs may have been lost due to this tragedy.
Downgrades in economic forecasts
- Major institutions and banks have cut their forecasts for the global economy, with the Organisation for Economic Co-operation and Development being one of the latest to do so.
- The coronavirus impact on the global economy have rocked markets worldwide, with stock prices and bond yields plunging.
- The virus outbreak also hit services industry as reduced consumer spending hurt retail stores, restaurants and aviation among others.
- A reduction in global economic activity has lowered the demand for oil, taking oil prices to multi-year lows.
What’s the impact on business?
Where a stringent policy response is deemed necessary, business will inevitably be impacted, with both near-term effects and less-expected longer-run consequences.
- Travel restrictions and quarantines affecting hundreds of millions of people have left factories short of labour and parts, disrupting just-in-time supply chains and triggering sales warnings across technology, automotive, consumer goods, pharmaceutical and other industries.
- Commodity prices have declined in response to a fall in consumption of raw materials, and producers are considering cutting output.
- The mobility and work disruptions have led to marked declines in consumption, squeezing multinational companies in several sectors including aviation, education abroad, infrastructure, tourism, entertainment, hospitality, electronics, consumer and luxury goods.
Some of the countries exhibit pre-existing economic fragilities have weak health systems and thus lower resilience to pandemics. Many Asian and African countries lack surveillance, diagnostic, and hospital capacities to identify, isolate, and treat patients during an outbreak. Weak systems anywhere are a risk to health security everywhere, increasing the possibility of contagion and the resulting social and economic consequences.