Question

I need some assistance with my 2000 word essay I am writing about COVID-19 and how it is affecting and affected the business industry around the world. Thank you.

Answer 1

ABOUT COVID 19(CORONAVIRUS)

Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered coronavirus.Most people infected with the COVID-19 virus will experience mild to moderate respiratory illness and recover without requiring special treatment. Older people, and those with underlying medical problems like cardiovascular disease, diabetes, chronic respiratory disease, and cancer are more likely to develop serious illness.

The best way to prevent and slow down transmission is be well informed about the COVID-19 virus, the disease it causes and how it spreads. Protect yourself and others from infection by washing your hands or using an alcohol based rub frequently and not touching your face.

The COVID-19 virus spreads primarily through droplets of saliva or discharge from the nose when an infected person coughs or sneezes.At this time, there are no specific vaccines or treatments for COVID-19. However, there are many ongoing clinical trials evaluating potential treatments.

IMPACT OF COVID19 ON BUSINESS INDUSTRY AROUND THE WORLD

COVID-19 continues to spread rapidly around the world. Almost every country has reported cases, but the burden is asymmetrically distributed.MORE than 46 percent of new confirmed cases have been reported in Europe and 39 percent in the United States. To an extent, that’s because countries are at different stages of the pandemic. Some that were effective at initial containment, such as Singapore and Hong Kong, have seen resurgence and are implementing additional measures to address it. Others, such as many countries in Western Europe, have seen the number of new cases plateau or begin to decline and are debating the right approach to reopening their economies. Some countries appear to be at the peak of infection and are urgently building surge capacity in their health systems. In other parts of the world, the number of cases is rising rapidly. Countries such as Russia and Turkey are seeing a recent acceleration. India too has experienced a significant increase in the number of cases since the beginning of April and has evolved its response strategy, including extending the nationwide lockdown.

Today, China’s economy is much more deeply intertwined with the world’s economy—a 17% share of global GDP with trade accounting for 34% of domestic GDP—than it was during the 2003 SARS outbreak. ‘The Coronavirus Outbreak and Its Impact on The Global Economy’ says that the best case, and also the most likely, scenario is one of Gradual Abatement where cases remain concentrated in China in Q1 2020, before gradually being eliminated from March 2020. In this scenario, the global economy would grow by 3.1% in 2020 with China’s GDP growth slipping from pre-outbreak forecasts of 5.9% to 5.4%.The report also finds that in the worst case scenario or what it terms the Severe Pandemic scenario, where the outbreak intensifies and spreads worldwide before being brought under control by June-July, global GDP growth could dip to below 2%.Apart from applying the brakes on GDP growth, I also foresee the outbreak affecting key macroeconomic indicators like oil prices and interest rates. I believe oil prices will fall as a result of reduced demand from China, the world’s largest importer of oil, and lowered demand for jet fuel due to widespread travel restrictions. I also expect more and deeper cuts to interest rates than in 2019 as countries scramble to shore up their tottering economies.

China accounts for nearly 60-90% of the exports and 50% of tourism revenues of these countries, leaving them particularly vulnerable to an economic slowdown.

I’ll add Japan, the world’s third largest economy, to this list. Japan’s fragile economy is unlikely to be helped by the reduced supply of critical manufacturing parts from China. If the coronavirus outbreak widens and persists, I reckon Japan could slide into a recession and be forced to call off the 2020 Tokyo Olympics.India, the world’s fifth largest economy and a major importer of electronics goods from China, stands to be affected by the higher prices of Chinese electronic components caused by supply shortages. Reduced imports from China are also likely to intensify food inflationary pressures in Q2 2020.

As for the world’s largest economy, the U.S. is likely to see a significant drop in retail imports in Q1 2020 compared to Q4 2019. There’s also a strong likelihood of the Chinese defaulting on several of the targets, including a $200 billion commitment to import U.S. agricultural goods (by December 2021), agreed to under Phase 1 of the U.S.-China trade deal of January 2020. Given the circumstances though, I believe that trade hostilities will ease up rather than intensify.

The lockdown in China has begun upsetting production and supply chains across automotive, travel & tourism, healthcare, high-tech manufacturing, and retail industries.The automotive industry has been particularly hard hit. Hubei province, the epicenter of the outbreak, is one of the five major automotive manufacturing centers in China, accounting for almost 9% of China’s vehicle production. It’s also a hub for auto parts production and domestic and foreign automakers. Plant closures have already upended global automotive supply chains. And with stocks diminishing rapidly, a global shortage of auto parts looms which will affect production volumes in 2020.

I’d recommend postponing any intended smartphone purchases this year because factory shutdowns are causing an upheaval in supply chains, triggering delays in new product launches and dampening production in the high-tech manufacturing sector.

While the airline industry has suffered a blow, the private business jet aviation industry is seeing growth as the rich and wealthy use their jets for business trips and also to extract top executives and critical products out of China.

There are other industries like online retailing that are experiencing a growth impetus with Chinese exhibiting greater openness now to buying cars online as opposed to going to dealerships. Online food delivery services are also, understandably, flourishing as are other kinds of contactless delivery services.

Then there’s the healthcare industry where disrupted supplies of pharmaceuticals, medical equipment and biotechnological devices threaten growth prospects. On the other hand, the demand for face masks has gone through the roof. I have been trying to lay my hands on a couple of them for the past three weeks but haven’t succeeded.

Companies may also struggle because investors are becoming more reluctant to lend them money. Appetite for new bonds, especially those issued by less-creditworthy businesses, has fallen off. Banks may also have to tighten lending standards. In a sign that investors believe the coronavirus concerns could hit banks hard, the stocks of the three largest U.S. banks JPMorgan Chase, Citigroup and Bank of America are all down by a lot more than the S&P 500 so far this year.

Mastercard cut its growth forecast in part because people are taking fewer international trips. Fear of the virus has prompted companies like Amazon and Nestlé to suspend international travel by some employees. That drop in demand, combined with their own concerns about the virus, has prompted United and other airlines in the United States and Europe to cancel flights to cities in China and elsewhere in Asia.