5 Ways The New Coronavirus Is Affecting The Economy
The first quarter of 2020 is just about coming to a close; yet it seems that the world has been through more trying times than we can count. Of the latest is the novel coronavirus (nCoV), which started out in December of 2019 in Wuhan, China, but which has only recently been spreading around the Philippines. With government mandated school suspensions and work from home contingencies being put into place, it seems safe to say that the effects of the novel coronavirus are both seen and felt all around the metro.
But what are its effects on the various industries that dominate our modern society? After all, nCoV goes beyond the individual — it is a public health issue. Today, we explore the various effects the virus has had on multiple industries of which we all depend.
Perhaps no other industry is as affected by nCoV as the airline industry. With multiple countries implementing travel bans (some escalating to lockdowns), it comes as no surprise that an estimated loss of US$113 billion is expected. Optimistic estimates claim that if the situation stabilises soon, only US$63 billion will be lost.
However, a few airlines are already suffering. Flybe, a budget airline based in the UK, has already collapsed, in part due to having previously struggled as an airline, but in part due to the demand slump caused by the nCoV outbreak. Airlines all around the world have cancelled thousands of flights so it seems like Flybe may not be the only casualty. For instance, Philippine Airlines had recently admitted to operating with billions of pesos in loss as of December 2019; needless to say, the eruption of Taal along with the nCoV outbreak has not done it any favours. Airlines worldwide such as Emirates and Cathay Pacific have also asked their employees to take unpaid leaves.
Hand in hand with the airline industry, the hospitality industry has also been hugely affected by the onset of nCoV. Early in February, before the virus had reached the Philippines, hotels and airlines had already been lowering prices due to low demand. At the time, the government had tried to persuade the public to take the opportunity to travel locally instead of abroad. However, with the local onset of the virus, this seems vague.
Governments around the world have already issued protocols for their respective hospitality industries, including the local Department of Health (DOH). The guidelines include measures for disinfection, sanitation, and calls for social distancing. But despite stringent implementation on both private and public levels, the hospitality industry continues to operate with less patrons than before.
While many can imagine the effects nCoV has on the travel industry, less pause to think of its effects on the overall manufacturing industry. Plenty of companies have factories in China, in fact China is one of the world’s leaders in manufacturing, for both foreign and local goods.
China manufactures car parts, electronics, pharmaceuticals, and the like, exporting these to various countries abroad. As such, its lockdown has had a ripple effect and caused a global shortage of supplies, particularly in the automotive industry. Now, as it reels from the virus and its factories begin to get back on its feet, China has yet to be completely in the clear. With the virus spreading globally, China is set to experience a plummet in global demand: cancelled orders and fewer customers.
In its latest monthly report, the International Energy Agency (IEA) reported that global oil demand has fallen; as such, its prices have also gone down (to just US$44 per barrel as of late February). This is manifested in the plummeting prices of gasoline products — a strange silver lining that could be shortlived as overall economic growth slows down within Asia.
However, Undersecretary of the Department of Finance, Gil Beltran did mention that the lowering of gas prices could possibly (but not assuredly) dampen inflation going forward through the months.
Among those most at risk from nCoV are health professionals: nurses, doctors, and health practitioners at the forefront of it all. Both abroad and in the Philippines, we’ve seen a rise in the need for medical attention, with China building massive coronavirus hospitals within days.
But the health industry extends beyond just hospitals and includes complementary goods such as tissues, face masks, and alcohol. While many warn against panic buying, some supermarkets have already run out of supplies. The government has already assured the public that production is ongoing and there will be an eventual restock on supplies, although dates are unsure.
In a handful of these cases, we can see the inverse relationship between supply and demand: while some industries have suffered losses from too little demand, others have had to do their best to cope with too much. Either way, we advise everyone to be careful within their surroundings and protect themselves however they can.
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