The Worldwide Economics of Coronovirus

The biggest challenge suddenly has come up ahead of the world is ensuring trust. Yes, it may sound really weird or strange to someone but the fact is we in this modern world, especially in recent times are running after trends. 

These trends are often driven by packets of information which gets circulated or rather we should call it ‘bombarded’ on us through various means of modern-day media. 

In the era of user-generated content which is mixed with strong AI tools, we get a lot of information which we may want to know. Yes, we ‘may want to’ this could mean that whatever we like or whatever we prefer to know can pop up on our mobile phones and we may form an opinion which might sound so authentic. Yes, the main problem of this phenomena is the fact that it influences our mindsets and opinions are formed. This is a very dangerous situation. So, what we are seeing as a result of this phenomena, is we see more and more people with strong fan followings, more and more people are having specific opinions which are so firm that they do not allow any scope of reconsiderations. 

 The Latest Coronavirus Trend

Well, the coronavirus outbreak is a global trend and looking at trends in the last few years this has become big. But why in this article I am naming this global pandemic as a trend. Well, I have reasoning here. Well, in dealing with any kind of contagious virus related problem, we have to understand how these viruses work in human bodies. Now, if we go by the authentic lines of medical treatments it is said that the virus if gets into anybody multiplies inside the body of the infected person and causes problems. Now, there is something called the Immune System. This strong system works very smartly, I will explain how in the next para. According to experts the viral infection or the multiplier effect of the virus gets triggered in conditions when the body temperature gets less than 99 degrees. 

Now, in case of any viral infection, the immune system creates a strong response mechanism which results in increasing the body temperature which is commonly known as fever. 

There are reports which say that the line of medications in dealing with coronavirus treatment the medical treatment aim to reduce the fever or temperature. This according to my observation as a non-medical individual is questionable. However, fever should be considered as a good sign of the body’s response mechanism. As a result, this whole thing gets stretched to 14 days or even longer. 

However, if we analyse these trends there was Dengue, chikungunya and several others in the last couple of years. 

Yes, we can’t take things lightly on any kind of health threats but we have to make necessary arrangements to deal with the viral infections.

WHO Advisory

On WHO’s website the Coronavirus recommendations say:

“Stay at home if you begin to feel unwell, even with mild symptoms such as headache and slight runny nose, until you recover. Why? Avoiding contact with others and visits to medical facilities will allow these facilities to operate more effectively and help protect you and others from possible COVID-19 and other viruses.”

“If you develop fever, cough and difficulty breathing, seek medical advice promptly as this may be due to a respiratory infection or other serious condition. Call in advance and tell your provider of any recent travel or contact with travellers. Why? Calling in advance will allow your health care provider to quickly direct you to the right health facility. This will also help to prevent the possible spread of COVID-19 and other viruses.”

The Coronavirus Impact on Business & Economy

This factor if analysed properly will lead to large and huge numbers. This will certainly be going to be a mind-boggling figure. There are certain industries which are worst hit by this coronavirus outbreak. 

Number one is the tourism industry. The tourism industry in the last couple of decades have done well and the world over we have observed a great upsurge of tourism spend. There are countries which have made their economy driven by the tourism industry. Another industry which is directly attached to this is the travel industry. Yes, this is also a worst-hit industry segment from the coronavirus outbreak. Apart from this, retail, logistics, education and many others have been affected by this. 

However, according to market analyst Mckinsey, there are three broad economic scenarios might unfold a quick recovery, a global slowdown, and a pandemic-driven recession. Mckinsey mentioned in its’ report on Coronavirus impact on the economy, “We believe that the prevalent pessimistic narrative (which both markets and policymakers seem to favour as they respond to the virus) underweights the possibility of a more optimistic outcome to COVID-19 evolution.”

This scenario of coronavirus outbreak assumes that most countries are not able to achieve the same rapid control that China managed. In Europe and the United States, the transmission is high but remains localised, partly because individuals, firms, and governments take strong countermeasures (including school closings and cancellation of public events). “For the United States, the scenario assumes between 10,000 and 500,000 total cases. It assumes one major epicentre with 40 to 50 per cent of all cases, two or three smaller centres with 10 to 15 per cent of all cases, and a “long tail” of towns with a handful or a few dozen cases. This scenario sees some spread in Africa, India, and other densely populated areas, but the transmissibility of the virus declines naturally with the northern hemisphere spring,” the report by McKinzey quoted. 

This scenario sees much greater shifts in people’s daily behaviours. This reaction lasts for six to eight weeks in towns and cities with active transmission, and three to four weeks in neighbouring towns. The resulting demand shock cuts global GDP growth for 2020 in half, to between 1 per cent and 1.5 per cent, and pulls the global economy into a slowdown, though not the recession.

In this scenario, a global slowdown would affect small and mid-size companies more acutely. Less developed economies would suffer more than advanced economies. And not all sectors are equally affected in this scenario. Service sectors, including aviation, travel, and tourism, are likely to be hardest hit. Airlines have already experienced a steep fall in traffic on their highest-profit international routes (especially in Asia–Pacific). In this scenario, airlines miss out on the summer peak travel season, leading to bankruptcies (FlyBe, the UK regional carrier, is an early example) and consolidation across the sector. A wave of consolidation was already possible in some parts of the industry; COVID-19 would serve as an accelerant.

In consumer goods, the steep drop in consumer demand will likely mean delayed demand. This has implications for the many consumer companies (and their suppliers) that operate on thin working-capital margins. But demand returns in May–June as concern about the virus diminishes. For most other sectors, the impact is a function primarily of the drop in national and global GDP, rather than a direct impact of changed behaviours. Oil and gas, for instance, will be adversely affected as oil prices stay lower than expected until Q3.

Pandemic Led Recession

This scenario is similar to the global slowdown, except it assumes that the virus is not seasonal (unaffected by spring in the northern hemisphere). “Case growth continues throughout Q2 and Q3, potentially overwhelming healthcare systems around the world and pushing out a recovery in consumer confidence to Q3 or beyond. This scenario results in a recession, with global growth in 2020 falling to between –1.5 per cent and 0.5 per cent,” this was quoted by McKinzey.

What is Likely to Happen 

Well, it is completely our estimate that things will come back to normal but with few changes in the lifestyle. For example, the travel industry is likely to bounce back but we may foresee huge growth of travel insurance. 

As of now, the travel insurance is limited to some organised business travelling domain but moving forward this will continue to become even wider coverage.  

Apart from Travel insurance, the health & hygiene segment will also be going to witness some great growth. 

Secondly, we have experienced a huge upsurge of ‘work from home’ concept. This will lead to the adoption of many technologies and IT solutions to create an environment work from home. This COVID 19 or Corona Outbreak will continue to influence IT heads of enterprise organisations as well as SMEs to prepare themselves with work from home mode. This level of flexibility will get more and more acceptance in the upcoming post corona era. 

 Needless to say, people are already aware and agile towards their health and health care services will continue to drive more attention. But we may also observe governments create special funds to deal with coronavirus. This is likely to become a common norm shortly. Also, a very common expectation is for the insurance industry where they market-struggling products such as travel insurance and health insurance will certainly get a great boost.

Moreover, the above are some assumptions based on visible indications but they are personal analysis so some can certainly feel free to express their thoughts may be in favour or against it by sending me an email faiz@smestreet.in or in the comments box below. But it is quite unanimous that we all hope and pray that this panic should end and life comes back to normalcy as soon as possible.