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What is the economic impact of the Coronavirus pandemic?

 

The Coronavirus pandemic took the world by surprise and in little over half a year it managed to spread all over the world, causing a lot of infections and deaths. Since the pandemic is spread in 185+ countries, it’s important to understand the challenges brought by this pandemic and find the right solutions.

Global shares are dropping

Ever since the end of 2019, the Nikkei, FTSE and even the Dow Jones industrial average started to see massive drops, all caused by the outbreak. In fact, the FTSE and Dow Jones metrics saw the largest quarterly drops since 1987. As a result, the investors are afraid that the Coronavirus pandemic will stop the world’s economic growth for a very long time.

Extreme unemployment

In the US around 30 million people lost their jobs. This type of problem is spread all over the world, it’s not something specific to a certain region. A similar trend has appeared in the UK where around a million people applied for benefits in just 2 weeks since the Coronavirus outbreak started in the country.

Oil prices are crashing

Due to the lockdown, the oil prices has crashed quite a bit. The overall demand is lower, to the point where the oil prices are under $20. This is the lowest price level in the past 18 years. As a result, the Coronavirus pandemic has affected a lot of people especially in the Middle East which rely on these natural resources to survive. In the use the WTI price also turned negative, this is the first time in history this has ever happened.

Recession risks

According to the International Monetary Fund, there’s a clear risk of recession that we are dealing with at this point. It’s said that the global economy will shrink with around 3% this year, maybe even more than that. IMF even expects the decline to be similar to the Great Depression in the 30s. The recession can rise around 5.8% if the pandemic goes throughout the second half of 2020.

Tech companies fare better

One of the fields that sees a lot of growth is the tech world. The demand for online sales has grown quite a bit and companies such as Zoom managed to grow their market share well beyond Amazon or Netflix which are also growing right now.

The most affected industries

Obviously there are some industries that seem to be the most affected. Travel restrictions ended up cutting the demand to visit other countries. What this means is people have to stay indoors, so until the travel restrictions are lifted, these companies as well as accommodation

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