Impact of COVID-19 on Businesses and Economy

Impact of COVID-19 on Businesses

COVID-19 has drastically changed the course of business around the globe. Business is a dynamic and unpredictable scenario; the turmoil of COVID-19 has made it even more complex. It has not only amplified existing challenges but also introduced newer obstacles for most businesses. While tourism, apparel, and most other businesses are paying heavily, information technology-focused business is thriving.

Technology Businesses are Thriving

Information technology is now a must for operational activities. Many industries are now using information technology to keep their work going. Educational institutions are using these technologies for taking classes, assignments, and exams. Many local businesses have now gone online for better service providing facilities. Information technology companies are now working in full force. From software development to data analysis, the firms are trying to provide the best quality products while fighting in a highly competitive market.

Swarms of new information technology firms are entering the market. Other services based on this, like education technology startups are especially seen. Due to COVID-19, internet-based educational organizations are receiving heavy profits. The bridge between education and technology has facilitated the major organizations that manufacture electronic devices too.

Severe Impact On Tourism Business

The most tormented business sector at this point is the tourism sector. This was the earliest to be hit. The countries that collect most from their tourism each year have been showered with back to back red flags. It is as if their economy has reached a standstill almost. Indonesia, Thailand, Greece, etc countries generally stay crowded with tourists at this time of the year. Unfortunately, this year is not the same. It has been projected that the international number of employees could fall 60-80%.

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Cultural and sports events always come with a large cycle of economic activities. Music festivals like Coachella and major sports events have been delayed or canceled this year. This has reduced the traffic of tourists and investments altogether. Hotels and residences all over the world have little to zero income now. Many families that used to earn from accommodation facilities like Airbnb are now not getting anything out of those resources. A significant number of hotels and restaurants plan not to fully restore their full staff. Many have already gone through the process of laying off employees. One of the most famous and historic hotels, Marriott is to be closed permanently in August 2020.

Impact on Transportation Industry

The travel industry is closely related to the transportation industry as well. Airlines industry earnings have been cut short due to the COVID-19 travel ban. Global air carriers can face the loss of up to $113 billion in revenue. Even with reduced charges, the airline’s businesses are not getting enough customers. It is projected that this crisis might prevail for one and a half years at least. Limitations on transportation can keep farmers from accessing markets and resulting in wastage.

The global epidemic could also have a measurable impact on labor-intensive crop harvesting and management leading to workforce shortages and temporary suspension of operation.

Impact on Agriculture

The pandemic could also have a long – term negative impact on the thousands of rural plantation workers involved in the export-oriented, labor-intensive agriculture sector in developing economies. In Kenya, tea generates livelihood opportunities to about 600,000 small scale farmers and working people which is facing major drawbacks after the current suspension.

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Impact on the Fashion Industry

For many, it’s about survival rather than sustainability. The fashion industry is already adversely impacted by the coronavirus epidemic at any conceivable aspect; manufacturing has halted, stores have shut, demand has declined. In March, clothing prices plunged by 34%, as most of the global population is actually unable to travel overseas or even socialize in the context of locking regulations. Many potential customers are simply not willing to purchase clothes now. There’s so much priority on buying essential items to endure during the quarantine. The fashion industry, which created $2.5 trillion in global yearly sales before the pandemic struck, should be hoping that buyers’ demand for luxury merchandise will increase as constraints on quarantine is ceased. RMG focused countries might need to renegotiate their deals with ordering companies. Low and middle-income countries may make it challenging to cancel or renegotiate these contracts, especially those with the higher-income counterparts.

COVID-19 and Unemployment

Rolls-Royce announced that they will cut off 9000 jobs worldwide because of this situation.

Unemployment can be a major issue in the coming days. It can effectively weaken the economy of a country. A significant rise in unemployment has been recorded. Within only one week, 3.3 million Americans decided to apply for unemployment, and another 6.6 million people have started looking for jobs a week later. The U.S. Federal Reserve official estimated that U.S. unemployment would be 30% and that the economy would be halved. Almost 80 countries have already requested the International Monetary Fund (IMF) for financial help. It is feared that the world might be heading to an economic recession.

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COVID-19 and World Economy

Since the outbreak of COVID-19, the world has experienced major economic turmoil. While the topmost economies are left shook, the situation only seems to be worsening. The stock markets around the world have crashed. Oil prices for WTI fell to negative prices in April 2020. Africa’s borrowing cost has been soaring high. Firstly, the oil price drop means lower prices in transportation. This happening on a large scale could lead some oil firms to go out of business or be burdened with bad debts. Russia gains 70% of all tax revenues from oil and gas. Russia could face a budget deficit. Overall, inflation can be a major hazard to most oil-exporting countries. Also, Middle Eastern countries might be compelled to decrease wages. That would directly affect remittance earning countries like Bangladesh where foreign remittances projected to fall by 22 percent already.

The fashion and apparel industry has faced a seismic shift. As most manufacturing facilities are china centric, the disruption in supply has presented a major threat to some of the prominent countries.

COVID-19 has emerged with unprecedented circumstances. The adversities that came with it have paved the way for quick innovation and improvement. Businesses need strong adaptability and expert leadership to navigate through difficult times.

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