Charlie Rogers, Manager, Bachelor of Management Studies (BMS), Lexington, Kentucky
Answered May 17, 2020
A pandemic is not an everyday occurrence, but COVID-19 has shown everyone around the world how a pandemic can become a fast-moving global crisis, that can take years to recover from. This long recovery time is because the pandemic has halted the economy. To prevent the virus from spreading, countries had to be put on lockdown.
This meant businesses are not open, and no money is being exchanged for goods and services. Even when lockdowns are lifted, people must remain socially distanced and limit the people in a room. Along with that, unemployment numbers are high, and places are forced to layoff employees due to a limit of resources and income.
The pandemic can definitely affect the economy of countries that are affected by the virus. It should be remembered that when a pandemic occurs, people are recommended to stay at home in order to stop the spread of the virus. At the same time, the different establishments and businesses are recommended not to open first.
Restaurants and other food places are not allowed to open because people cannot dine in. It would depend on the severity of the lockdown, but since businesses are affected, the economy of the country also becomes affected. The longer that the lockdown will take effect, the more that businesses will also lose a lot of money.
The pandemic is known to affect the economy of the whole world in a negative manner. There are a lot of industries that are highly affected by this. There are a lot of businesses that are forced to close down and not sell because they know that what they are selling is not considered to be essential right now. Even industries that used to be in demand like oil have already decreased in terms of price.
There are not enough vehicles that are traveling. Airplanes are not even allowed to travel in most parts of the world, which means that the demand for oil has become significantly lower. It is obvious that the affected industries are feeling the issue significantly as they are losing money and sales very fast.
The most recent estimates of the pandemic infer that the effect it will have on the economy will be dramatic because a potential vaccine is still several months away, if at all. It is forecast that this will be the worst economic slump since the Great Depression.
Government interventions, such as dispatching money directly to households, seem futile when people do not want to leave their homes, and people are fearful of even receiving packages at their door. The rise of the pandemic has everyone dipping into their lifesavings just to pay the bills.
Shops and restaurants are also closed, and there is no money to be made for businesses. The tourist industry has slowed down, not only for the airlines but for cruise ship operators and the oil industry. Banks may have to absorb extra loan defaults as a portion of its customer base loses work.