Last Updated : 2020-05-16 21:24:27
During the global COVID19 pandemic, over 75% of the world's countries are infected, and not just human lives, but the economy as well. This has left businesses counting the costs all around the world. But, this doesn't go without saying, that the number of lives we have lost amidst this is tremendously high.
The economic damage is vastly caused by the decrease in demand, meaning that there aren't enough consumers to buy the goods and services available in the global economy. This can be clearly understood by the heavily affected industries such as travel tourism. Countries have placed restrictions on in-coming and out-going flights to slow down the spread of this disease. This is resulting that many people are not purchasing flight tickets. This reduction causes the airline to lose planned revenue, meaning that they will have to cut their expenses by reducing the number of their flights. Without government assistance this will cause them to increase the number of lay off staff to further cut costs. This dynamic can also be seen in many other industries, such as the oil industry, since the demand for oil and new cars has dropped drastically because social events are not being held anymore.
As the companies increase the number of their lay off staff to make up for their revenue losses, the worry is that this will create a downfall in the economy. Reason being that these workers who lost their jobs, will no longer be able to afford unaffected goods and services. This is what worries the global economists if the COVID19 could lead to a recession.
Now, this may all sound bad, but there are always reasons for us to hope for the better, for example. Governments have learned that there are ways to encounter these types of crisis, one way is government spending, and consequently many governments around the world have increased their provisions of monetary welfare to citizens and are ensuring that businesses have all the funds they need to keep their staff employed through this pandemic. In addition, because of this crisis, it is possible that some economic sectors may benefit, such as Ecommerce and health care. In result this will provide some economic growth to off-set the damage caused by this pandemic.
So now we know, there are reasons to believe that with the right government responses, we can avoid some of the more catastrophic predictions, and that this pandemic will not have a detrimental affect on the global economy.
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