Updated: Aug 29, 2020
The Coronavirus outbreak is a human tragedy which is having a huge impact on the global economy with cities in lock-down and travel restrictions in place which is having a huge impact on tourism, global trade and commerce. Many companies are as a result reducing business travel, closing factories and cancelling major industry events.
A new study by Dun & Bradstreet researchers found that at least 51,000 companies worldwide, have one or more direct or “tier 1” suppliers in the impacted region, while at least 5 million have one or more “tier 2″ suppliers. As we understand more of the impact the virus is having on the global economy, below is a breakdown of the top impacts the Coronavirus is having on business.
The COVID-19 outbreak has already had a huge impact on the travel industry with many airlines suspending flights to mainland China early February 2020. Many countries including USA, Australia and Russia imposing government issued travel restrictions with many set to follow with the recent outbreaks in Italy, South Korea and Iran.
The airline industry has taken a big hit with the outbreak of the virus with thousands of flights cancelled worldwide as airlines struggle to cope with the slump in demand. Ryanair, British Airways and Easy Jet have all cancelled flights to Italy following the recent outbreak with Norwegian Air said to cut 3,000 flights in the next three months. Flybe was the first to collapse due to the Coronavirus outbreak, a smaller airline not able to cope with the slum in demand but it now looks likely that the larger airlines could follow suit. Korean Air’s president Woo Kee-Hong said the airline could not predict how long the crisis would last and outlined "But if the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company's survival," he said in the memo, which was seen by Reuters news agency.
Employee and Labor Shortage
The quarantines in affect for millions of people in China and around the world has left many factories short of labor which has disrupted supply chains and triggers sales warnings across consumer goods, technology and many other industries.
As the virus now spreads to other parts of the world it’s not just the labor shortage in factories in Asia but all types of businesses located in many industries around the globe. As the Coronavirus cases spike, many consumers are moving towards online shopping on sites such as Amazon. This in turn has implications as low-wage employees at companies like Amazon who may feel sick but are still reporting to work subjecting them and others to the contagious virus. But the reverse also creates problems if all staff are to be quarantined and delivery employees are required to stay home, this would result in mass manic with Amazon being no longer able to guarantee or fulfill orders.
Many companies are now opting to offer remote working options to their employees in the attempt to stop the spread of the virus in the workplace. However, the gig economy is vulnerable for services like Uber and Airbnb with Uber drivers deciding to quarantine themselves as demand continues to increase the price of these services could increase dramatically.
The spread of the Coronavirus has become one of the biggest threats to the global economy and financial markets. Many major institutions and banks cutting their forecasts with stock prices falling steeply. Commodity prices have declined in response to a fall in China’s consumption of raw materials and producers are considering cutting their output. The virus is now impacting oil prices as the demand for oil has lowered with oil prices declining globally. As a result of the Coronavirus, the global economic growth is expected to slowdown when compared to the projected growth at the start of the year.
Many businesses are now bracing themselves for the economic impacts of the Coronavirus on their business with mobility and work disruptions across Chinese and European consumption. This is putting a huge strain on global companies in many sectors including aviation, tourism, entertainment and consumer goods. The airline industry is one of the worst hit as mentioned in the travel restrictions section above, but this in turn is impacting the tourism industry and markets of all types of products. In Italy, where the virus outbreak has been the largest outside of Asia, markets for the country’s wine and leather shoes are struggling among many other industries across Europe and Asia due to the decline in demand and disruption of production.
As of March 2020, the Coronavirus is continuing to spread globally with no real control of the virus as governments and businesses act to control and contain the virus. The long-term effect of this pandemic remains to be seen with many businesses squeezed during the global spread of the virus.
By Mark Ollerton - Freelance Writer