Coronavirus is a new virus that can impact both people, and animals. It can lead to a wide range of respiratory ailments ranging from common cold to pneumonia, and lung lesions. It spreads easily from one person to another by coming in contact with infected person.
Originated in China, this virus has till date infected 125 countries and caused 5,700 deaths throughout the world. The spread of this virus is increasing in the United States, Europe and other nations. With closing factories, declining transportation, etc. coronavirus is emerging as a threat to mature economies. Let us learn more about the impact of coronavirus on worldwide economy.
The outbreak of coronavirus disrupts the worldwide supply of goods, that is making it difficult for American firms to fulfill orders. Its impact will reduce presence of employees in the organization and can result in reduced labor supply. It will result in reduced demand for U.S. services, and products. The uncertainty, and economic disruptions resulted from the virus is reflected in higher volatility, and lower valuations in the financial markets.
Series of deaths caused by the virus, has brought a downfall in the stock market. Looking at the economic impact of this virus, the Federal Reserve has aggressively reduced rates.
To save from catching the virus, people are reluctant to move out of their homes. The fear in the people is keeping them at homes. Parents are not sending their children to school, the population in gyms, malls, theatres, restaurants are decreasing. They are postponing their travel and withdrawing from plans to attend a sporting event, musical concerts and any other places where large gathering is suspected.
Just as the outbreak of the virus is posing threat to children, and senior patients, it is becoming risky for mature economies. The widespread damage caused due to coronavirus is disrupting the worldwide supply chain. Closing down of industries, and reduced transportation of passengers, and goods has led to shortages of a wide range of essentials that includes automobile parts, generic medicines, and other consumables. Financial analysts are speculating about a worldwide recession in the upcoming months.
The stigma in people about the cruise ship disaster has persuaded several people to withdrew traveling cruises. People have stopped attending US sporting events. Teams are prevented to travel to other nations to play matches as they suspect that players can catch the infection. Sports has been a huge business in the US and people spend a lot on watching these events. The sudden reduction in participation of sporting events has given a huge blow to economy.
Around 60 million Americans used to spend $19 billion, and $6.6 million Chinese used to spend $6 million annually on gyms, that is stopped due to the outbreak. This is just a start. A decline in retail and restaurants services is making the global economy to suffer a lot.
COVID-19 will directly shape financial losses via supply chains, financial markets, and demands that affects household consumption, international trade, and business investment.
The virus outbreak has forced a thousand of firms to shut their manufacturing plants in the Europe, and the U.S. on a temporary basis. This act will disrupt worldwide supply chains, and demand for services, and goods in the impacted economies. Such type of disruptions will make it hard for U.S firms to bring their produce / goods to customers. These firms will lessen exports from the America to the remaining parts of the world in the upcoming months.
Manufacturers located out of China are forced to reduce production in their plants. Due to absence of workers at workplace, it will further reduce economic activity of the nation. Supply chain disruptions will arise difficulties for American companies to finish their products and bring them to customers. This will result in reduced economic growth, and activity in the nation.
Corona Virus spread will impact the mobility as well as short-term employment projections of migrant workers. Consumers will be purchasing fewer things as they may suspect virus in the consumables. The virus won’t just negatively impact the supply, but also the entire U.S. economy as they begin to experience reduction in demand and revenue.
People will be less likely to travel, purchase services, and goods, or eat in outside nations due to fear of getting exposed to the virus. Hotels and air travel will feel a massive decline. People will cut down on their expenditure and increase their emergency savings.
Also, as firms will start to shut down, they will make less money in some case “no pay at all”. People will spend less, and there will be reduced overall demand.
China is one of the major travel destinations in the world. Due to mass cancellations of flight to and from China there will be massive loss in visitors, and revenue generation.
Multinational firms and luxury goods manufacturers who depend on Chinese industries will have suffer and may need to close their stores as well. Exporters in different countries will find it hard to sell their merchandises globally, and this can lead to negative repercussions in the area of jobs, and growth.