The COVID-19 pandemic continues to spread and it’s tough to predict when our lives will return to normal. With over 25 million infected and almost 850 thousand dead, the coronavirus has turned the entire world upside down. The virus has had a huge impact on our everyday lives but it has also affected the business world and economy like nothing before.
Small, medium and large businesses have all been affected and not all of them got to survive the pandemic. As we wait for the pandemic to end, let’s look at the impact of the coronavirus on business and economy.
Impact of COVID-19 on small business
Over 99 percent of all businesses are small businesses. In the US, they employ about 50 percent of the country’s workforce.
Unfortunately, small businesses were heavily affected by the pandemic and for some, the coronavirus meant they had to close for good. The biggest reason why the COVID-19 pandemic has had such an impact on small businesses is that most of them didn’t have cash reserves to survive a month-long interruption.
A recent survey showed that the pandemic has cost the average small business in the UK over £11,000. It’s important to note that some areas were hit more than others and numbers may vary.
The point is, most small businesses simply cannot afford such losses. For many of them, a loss like that means they have to shut down permanently. About 7 percent of small businesses in London had to shut down while about 5 percent of businesses in Scotland did the same. In the US, 14 percent of businesses that had to close due to pandemic still remain unopened. Keeping your business going during a pandemic isn’t easy but some seem to have done so effectively. The biggest issue small businesses are dealing with at the moment is the potential second wave of the virus. About 58 percent of small businesses are worried about having to close permanently in case of a second wave.
Impact of the virus on large corporations
Unlike small businesses, most large corporations have financial reserves to weather situations like the one we’re facing at the moment. However, with the amount of money in the game, it’s safe to say the COVID-19 has had a huge impact on large corporations as well.
Most large corporations operate on a global level and almost all of them faced huge logistics issues when the pandemic first stroke. At one point in April 2020, 91 percent of the global population lived in countries with travel restrictions. Not only that people who operate internationally weren’t able to travel, but for many companies, this meant transferring goods is impossible. Airline cargo and aviation in general are some of the industries to suffer the most and businesses have to adapt if they want to continue operating as usual.
Some countries still have their borders closed and cargo handling remains a huge issue. Another huge change brought by the coronavirus is that businesses will look at diversity when targeting markets in the future. That way, in case of a crisis like the one we’re facing now, if one country goes under full lockdown, they can still remain open for business in other countries. This may especially be the case with companies that target Asian countries as that’s where the pandemic broke out in late 2019.
Effects of COVID-19 on employment
There’s no doubt the coronavirus has had a huge impact on employment. Businesses are being shut down and even those that remain open, are forced to make cuts. Some of the businesses that still operate had to lay off workers or reduce their wages.
According to reports (PDF), even in its early days, the COVID-19 pandemic has affected 2.7 billion workers worldwide. That’s the most severe impact on employment we’ve seen ever since World War II. While some businesses are reopening and lockdown measures are being eased, the impact of the pandemic on employment remains a huge issue. At the moment, it’s estimated that about 57 million jobs in the US are at risk, and the same goes for 59 million jobs in the European Union.
In the past few months, we’ve also seen a record 3.3 million Americans filing for unemployment benefits. The problem is, it’s unsure when we can expect things to go back to normal and have people stop worrying about employment. For example, even when the pandemic ends, it’s unrealistic to expect people to shop the way they did before. Individuals and families are more careful about the way they spend money as they fear a second wave or a new crisis.
Industries most affected by COVID-19
Naturally, not all industries experienced the same issues during the pandemic. It’s just that the nature of some industries is different and for some, social distancing is more of a problem than it is for other industries. The worst-hit industry worldwide is, without doubt, tourism.
The pandemic has made traveling practically impossible and people were forced to cancel or reschedule their trips. For most, this meant no summer holiday at all. As a result, the tourism industry suffered huge losses. According to reports, the pandemic will cost the industry about 1.2 trillion but we may see the number increase even more. Italy, being one of the worst-hit countries by the pandemic, has seen a huge decline in tourism in 2020. Roughly, the sector is expected to lose about 28 billion Euros. This is an extremely large loss for a country in which tourism amounts to 13 percent of the country’s GDP.
Another industry that experienced huge losses due to the pandemic is the entertainment industry. Social gatherings have been banned across the world, which translated into concerts, plays, and cinema releases being canceled. Hollywood, alone, is expected to lose about $20 billion, depending on when the pandemic ends. Other, heavily-hit industries such as scenic transportation, amusement parks, and sports industry.
The coronavirus and currencies
Just like with everything else, the coronavirus has made an impact on currencies across the globe. This isn’t only important news for those trading with forex but for anyone who is storing wealth. While some currencies have suffered due to the pandemic, others seem to do well. For example, let’s take a look at the Euro. The Euro is seen as the funding currency which makes it strengthen in times of crisis, which is exactly what we’re experiencing at the moment. Similarly, the dollar continues to be the king when it comes to currency. Most people still see the greenback as a safe haven and traders and investors are turning towards it as the pandemic continues.
Another, relatively new, type of currency is performing well at the moment – digital currency. When the pandemic first started, investors wanted to panic buy gold as precious metals always perform well in situations like this. However, it didn’t take long for borders to get shut down and logistics to become a problem. When that happened, they turned to something they can buy with just a few clicks of a mouse – cryptocurrency. In other words, big money boys now target Bitcoin and other digital currencies and with a good reason. When the pandemic started, Bitcoin first fell below $10,000, but it didn’t take it long to go up and reach as much as $11,848 at the time of writing.
What lies ahead?
The coronavirus is still in our community. Some areas have seen a decrease in the number of cases while others have seen a sharp rise. The presence of the coronavirus is expected to fluctuate for quite some time and up to 95 percent of us are still vulnerable to the disease. This means no one knows for sure when the pandemic will end and things will go back to normal. So, until we witness some big changes in the number of cases, we’ll have to continue to adapt.
For our everyday lives, this includes social distancing and working remotely. But what does it mean for the economy and the business world? Experts are worried about the future of the economy as the impact of the COVID-19 on the economy continues to increase. Job losses are being felt across the globe and a prolonged recession of the global economy has left 68.8 percent of experts to feel worried.
Another thing they’re unsure about is some industries’ ability to properly recover even once the pandemic is over. Of course, another huge issue we’ll hear a lot about in the future is the unemployment rate across the world. 49.3% of experts are worried about high structural unemployment, especially among young people.
The bottom line
The coronavirus pandemic has, without doubt, turned our lives upside down. No one knows when the “normal” life will continue and we won’t have to worry about catching the disease. Until that happens, the pandemic will continue to leave mark on the business world and economy across the world. The only thing we can do is wait and see how things will look in a year or two. Until then, it’s important to stay up-to-date with what’s going on with the business world and economy.
