ECONOMIC IMPACT OF COVID-19
COVID-19 is an infectious disease caused by the most recently discovered corona virus. This new virus was first reported in December 2019 in Wuhan, China. Since then, the virus has been spreading sporadically to other parts of the world, having significant effects both socially economically and to some extent politically, but in our thesis, we are going to major on the economic implications that came with the spread of the virus.
Halt operations of the Airline Industry
After being discovered in china as an infectious disease affecting the respiratory system, one way to contain it was to suspend international flights; thus, the transport industry was majorly affected, specifically the aviation sector. This implied that the airline workers were sent home or forced to take unpaid leave as the lucky ones were allowed to take a pay cut. This had a ripple effect on the economy in that one job in the airline transport industry supports some other jobs in the economy. As such, the aviation industry’s collapse would translate to significant losses in different sectors of the economy.
Tourism & Hospitality
Due to the pandemic’s travel restrictions, the tourism and hospitality sector faces possible collapse. This is because the facilities used by tourists such as hotels and parks are underutilized or not used at all it. Therefore, this means that no income is generated to sustain the workers employed to work in that sector of the economy.
Financial and Commodity Markets
As the virus continues spreading to significant economies around the world, most investors in the equities market have become net sellers, wiping out any year to date gains that major indices had made. Most investors have moved to place their money in safer haven assets such as gold, driving their prices upwards. The collapse of the oil prices mentioned earlier has also negatively affected the stock markets, with investors rushing to dump stocks in the energy sector. However, companies focused on diagnosing, treating, and preventing the pandemic have been recording gains in their stock prices. Some of these stocks include Vaxart Inc and Inovio Pharmaceuticals Inc.
Conclusion
With fears of a new recession and financial collapse, times like these call for resilient and strong leadership in healthcare, business, government and wider society. Immediate relief measures need to be implemented and adjusted for those that may fall through the cracks. Medium and longer-term planning is required in order to re-balance and re-energize the economy following this crisis. A broad socioeconomic development plan, including sector by sector plans and an ecosystem that encourages entrepreneurship, is also needed to flourish with robust and sustainable business models. It is prudent that governments and financial institutions continuously re-assess and re-evaluate the state of play and ensure that they cushion their citizens and economy from the ripple economic effects caused by the pandemic.