top of page
  • Writer's pictureBDW

Coronavirus Economic Implications

It is at this time that we all consider the fragility of it all. Not only are we fragile and susceptible to various diseases individually, but there are greater ramifications for our global community. In order for our economy to run smoothly, we need employees to build, make or create products for consumption.

Having large quantities of sick and ill people missing from the workforce has a considerable impact on the macro-economy. Although various healthcare professions and providers may benefit in the short term, the far-reaching impact of a global pandemic like the Coronavirus will be felt for many years.

How does a virus, like CORVID-19 impact the global economy?

Globalization is our downfall

The world is so much smaller these days with air travel and globalization. Countries are dependant on each other to supply key ingredients or finished commodities to each other. For this reason, the trade-free agreements are such a hot discussed conversation piece these days. In the case of biological warfare or an outbreak of a disease, it is so much easier for it to travel continents and touch every corner of the world before we even know what has happened.

Business people (people) travel for conferences, trade shows and to meet with vendors or customers every day of the year. They have contracted the illness and are on another plane before anyone even knows that there is a concern. Before the news of the outbreak, someone exposed may have been in contact with 1,000 people on 3 different continents.

Travel Restrictions

Travel restrictions impact industries like hospitality and aviation. Fewer beds are filled in hotels and aircraft fly with empty seats. Airlines and hotels can take the precautions for safe accommodations, however, every traveler is an anomaly and brings with them the hundreds of personal contacts from the previous 2 weeks.

Although there may not be actual travel restrictions enforced, many people will quarantine themselves and restrict their travels as a precautionary measure.

Investment Restrictions

Nothing like uncertainty for business owners. Successful business people are successful because they manage their risks. Things are never guaranteed, but successfully planning and managing your risks allows you to overcome the challenges and obstacles that arise in a business.

Holding on and not investing at this time is inevitable. This greatly damages the economy as it curbs the flow of funds between businesses and through the hands of consumers. Hiring decisions are put off and delayed, closing the windows of opportunities for many people.

Reserves are used up

With lower sales numbers, companies maintain their status quo using up reserves and profits that would have been invested in new projects and new ventures.

Loss in productivity

With many employees out of work or having their routines disrupted, companies will miss production or delivery quotas. This not only impacts their cash flow cycle but increases the opportunity for competition to take a stake. This all gives business leaders the excuse to hold off on expenditure which in turn leads to further shortages and bottlenecks.

As you study the macro and microeconomic impacts of a health-related pandemic, consider the very real human impact. The stock market may be down, business volume down, but remember that it is all short term. We need to take a step back and consider the BIG picture and make business decisions based on that.

Get tested yourself for the illness and speak to your doctor about the symptoms. Take time to care for yourself and the staff. Do not fret in the short term, take courage through this time and continue on reaching for your goals.



bottom of page