20 Ways Coronavirus Has Already Impacted Global Economies

19. Media Panic

People quickly started overreacting about the coronavirus because media outlets used their usual tricks of reaching to people’s emotions. They give numbers about how many people have passed away without giving the whole story. The media will use trigger words, such as “killer virus” to make people overreact. They also tell people that underreacting about the virus is harmful. If people aren’t panicking for the epidemic, they aren’t concerned enough.

Of course, this isn’t what experts say. They believe that you don’t need to panic or stock up because of the coronavirus. Instead, experts say you need to pay attention to symptoms and head to the doctor as soon as possible. If there is an outbreak, let the doctors handle the situation because they’re prepared. They explain that panicking will always make the situation worse. In other words, do some research before you jump the gun about the coronavirus, especially when it comes to your finances.

18. The Stock Market Is On The Way Down

One of the biggest news stories comes out of Wall Street and the New York Stock Exchange. Stockbrokers started to worry about the coronavirus and how it would affect stocks. Part of this was because of news they heard from some stores that began to take precautions For the virus. Another part of it is because most stockbrokers run on emotion. When times get tough, they start to panic and sell so they don’t lose much money.

The problem with so many brokers selling their stocks at once is that the stock market continues to go down. This is one of the foundations of the stock market. When you’re buying stocks, the amount of the stock increases. But when you’re selling stocks, the amount of the stock decreases. When a stock declines, you can lose money and some brokers might find themselves in the hole. This causes them to panic, which causes the rest of the world to panic.

17. China’s Economy Is At A Standstill

Not only are 4 million people trying to find a way to make it through the year after losing their jobs in 2019. But they are now faced with the coronavirus, which has put a pause on China’s economy. In fact, China went from a 6% growth rate to 4.5% since the outbreak of the virus in China. This is definitely considered a financial crisis for the country because they haven’t seen numbers this low in a long time.

Unfortunately, the struggles with China’s economy doesn’t stop there. Because most people are in lockdown, their economy continues to take a hit. It’s estimated that by the time the outbreak is over, China’s economy could see a possible loss of 42%.

16. Growth Will Stagnate

For the past 11 years, we’ve seen nothing but growth from the economy. Fewer people are securing unemployment because they have jobs. In fact, there are dozens of places that can’t find people. Growth is a good factor because it means that jobs continue to come and wealth increases. Unfortunately, since the coronavirus came into view, growth started to slow down.

The Organisation for Economic Cooperation and Development (OECD) started observing slowed growth from the beginning. They notice the rate slowing down every time another country states they have a Coronavirus outbreak. Because of this, the OECD believes that the economy will grow slowly because of the epidemic. While they feel it’s most likely temporary, they know it’ll impact the economy.

15. Airlines Have Already Lost Billions

People are canceling their flights. They aren’t going on vacation. Business personnel is working from their office and calling or emailing clients instead of traveling to meet them. Because of this, the International Air Transportation Association (IATA) states that airlines all over the world have already lost billions of dollars.

At the moment, Chinese airlines, which now stay on the ground, took the worst hit by claiming losses of about $12 billion. However, with more countries diagnosing residents and tourists with the coronavirus, more planes are staying on the ground. This will cause the airline industry to lose more money. Some worry it could be one of the worst cases in history.

14. Bank Loans Are Not Getting Paid Back

Individuals who find themselves out of work because of the coronavirus outbreak and companies that aren’t receiving the income they usually do are unable to make their bank loan payments. The amount of non-performing loans of $1.1 trillion around the world. Of course, because the outbreak continues to grow in the world, this amount will only grow.

You can imagine what type of effect this can have on banks that don’t receive their money. It’s easy to understand what can happen to the economy if procedures and plans aren’t put into place to help both sides suffering from the outbreak.

13. Global Shares Are Taking A Hit

You know stock market numbers are going down. They continue to do so as the coronavirus makes its way around the world. While the market didn’t see too much change in global shares when the coronavirus remained contained in China, once it spread outside of China, stock investors quickly took notice.

Even large companies that usually don’t see a change with news saw a significant shift. Because of this, more people started to trade or sell their stocks, which lowers the price. It’s gotten so bad over the last couple of weeks, that the last week of February saw the lowest numbers since 2008. Everyone involved in the stock market is hoping governments will intervene so we can avoid a crash or financial crisis.

12. Argentina Was Already Hurting; Now….

Argentina already had a financial problem before the coronavirus. They needed to find a way to keep themselves out of debt as inflation continues to grow, climbing to 50%. Before the outbreak, Argentina looked at getting another International Monetary Fund (IMF) loan, which they received at least 20 times in the last 70 years to keep their economy afloat.

Now with the coronavirus outbreak, a loan isn’t in the works, and the global economy looked at Argentina to find a new way. Therefore, the new President Alberto Fernandez decided to freeze prices and increased salaries. While Argentina stressed about their funds before the coronavirus, the president and everyone else in the country admits that the virus is only making it more stressful. The loss of the IMF doesn’t mean that global economists won’t help the country. It merely means that they need to write down the debt, as the worldwide economy knew it’d happen to other countries as well. They also need to start figuring out other plans.

11. Factories Are Slowing Down

One of the most significant ways China contributes to the world economy is through its factories. China makes up a third of global manufacturing. The country is also known as the world’s largest exporter of goods. When they shut down their factories, they stop producing and sending goods across the globe. As you can imagine, this can quickly cause a shortage of products and have other effects on the market.

At the same time, most government agencies are explaining that the best way to contain the coronavirus is to stop shipping goods and ground airplanes. People shouldn’t travel, nor should anything someone touches change hands. However, other people say that this doesn’t matter too much and we shouldn’t panic about the coronavirus like this because it doesn’t help the economy.

10. The Economy Continues To Slow

The economy isn’t just slowing down in certain countries such as China and Argentina. It’s slowing down in general all over the world. In fact, Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, believes that the outbreak will continue to slow down the global economy throughout 2020. Unfortunately, the more the virus spreads, the bigger hit the global economy will take, and the more it’ll take to repair the damage and build it back up.

The IMF now expects 2020 world growth to be below the 2.9% rate and under the 2019 numbers. At the same time, Georgieva admits that this can quickly make a change if the outbreak starts to die down a bit. She also states that this isn’t the lowest rate in recent history as 2009, which was 0.7%. Georgieva stated the situation, “Global growth in 2020 will dip below last year’s levels, but how far it will fall and how long the impact will be is still difficult to predict.”

9. People Are Buying Less

There is a bigger problem in the world than China’s factories shutting down. Even with the big panic that’s plagued many stores to the point they don’t have many items like toilet paper and hand soap on their shelves, people aren’t buying products as they did before the coronavirus outbreak.

The reason people are buying less is that they don’t want to expose themselves to the virus. Fear is driving that force as they stop eating at restaurants, stop buying cars, and much more. In fact, within the first couple of weeks in February, China’s car dealership sales dropped 92%, and China isn’t the only country facing a lack of sales. Another sales factor that is taking a big hit is smartphones.

8. IMF Is Doing What It Can To Help

Countries all over the world are declaring a state of emergency because of coronavirus. Even for the countries that haven’t done so yet, it’s expected by the IMF. They are preparing to do everything they can to help every country. Because the global economy is already taking a hit, the IMF needs to adapt in different ways so they don’t place the world further in the hole.

So far, the IMF has pledged a budget of $50 billion to help various countries, especially the poor and middle classes during the crisis. The focus of the IMF is the health care systems. They are also focusing more on countries that are already struggling financially. The group is already making plans with some of the poorest countries, which includes giving them $10 billion and not asking for interest for at least 10 years.

7. The United States Federal Government Cut Interest Rates

Recently, the coronavirus made its way to the United States. Since then, thousands received the coronavirus diagnosis, and 11 of them have passed away. While this isn’t a number to send every state into a panic, it’s caused action from the United States Federal Government.

In the first week of March, the federal government decided to cut interest rates as a way to try to shield one of the largest economies from taking a massive hit due to the coronavirus. Unfortunately, this action didn’t make many stockholders feel better about the stock market. While the United States’ economy is still stronger than other economies, it’s already seen problems since the outbreak. For instance, the virus has caused a material change in the U.S. central bank’s outlook for growth.

6. The US Government Vows To Act In Favor Of The Economy

While the IMF has healthcare on its mind, the United States government is focusing on the economy. One reason for this is because it has one of the biggest economies in the world, so if it fails, most of the world will fall into another Great Depression along with the United States. Fed Chair Jerome Powell stated the interest cuts, “The virus and the measures that are being taken to contain it will surely weigh on economic activity, both here and abroad, for some time.” This came after the government decided to cut the interest rates by 1.00 to 1.25%.

Later in a news conference, Powell gave about the coronavirus and the effects on the United States economy, he stated, “We’ve come to the view now that it is time to act in support of the economy.” He then added, “I do know that the U.S. economy is strong, and we will get to the other side of this; I fully expect that we will return to solid growth and a solid labor market as well.”

5. You Can’t Forget About The Bright Spots

One factor that the United States Government did take into consideration was trying to look at it in a positive light. Just like experts don’t want people to panic about the coronavirus, the government wants people to remember that this is temporary, and they shouldn’t jump to conclusions as this won’t help the economy. In other words, take precautions to make sure you’re safe, but don’t forget to look at the bright spots.

Of course, it’s not easy to find positives in the coronavirus outbreak, but doing so helps people stay in the right mind. One of the positives that are helping the economy is that gold has risen in price. In fact, it came back to its highest price in years, reaching the same rate it did in 2012. This means in February gold reached a seven-year high of $1,682.35 per ounce.

4. Italy Is Banning Fans From Sporting Events

If you’re in the United States, you might not realize that other countries’ economies are already suffering worse than the United States. China isn’t the only country that’s taking precautions like closing businesses and canceling events to stop the coronavirus epidemic. Recently, Italy took the same type of step when they decided to ban fans from sporting events.

Sports are huge in Italy, and people from all over the world will go to a regular sports game because they want to see part of the culture. Of course, this is also where Italy gets a good percentage of their revenue, so it’s also hurting the country’s economy.

3. Asian Markets Are On Mute

Many countries around the world allow markets set up on the streets and sidewalks. It’s one of the most significant ways that the country’s economy makes its revenue as people from all over the world purchase the items sitting at the table, usually through a bargaining process. Unfortunately, when you have a situation like coronavirus you need to look at shutting down these markets – or as Asia says, putting them on mute.

Other markets in Asia on mute include its stock market, which affects the global economy as well as the local economy. All exchanges are seeing a decline in their prices, and while the global markets have a plan in place for this situation, it doesn’t take away the fact that the global economy is seeing a decline in general.

2. Some Stock Markets Are Sitting Steady

One of the biggest ways you can tell how well or poorly a country’s economy is performing is by watching their stock market. Asia is struggling because their market is on mute. The United States is still strong even though numbers have dropped. When it comes to England, the stock market is sitting at a steady pace.

Of course, this doesn’t mean that England hasn’t seen their prices drop. They did after the coronavirus outbreak went outside of China, but since then, they’ve found themselves at a more steady pace. This is a good sign for the economy, especially if the market starts to see an increase instead of a decrease once the line starts moving again.

1. So What Can You Do?

It’s frightening to look at the global economy and see that some are muted, some are sitting steady, and some are in decline. You may fear the days of the Great Depression could be coming back. While times have changed and it won’t be the same, the financial crisis of 2008 can easily return if the right decisions aren’t made.

The realization is that the country’s separate governmental entities are working closely with the IMF and the global economy to ensure all the right steps are taken. So what’s the best choice for you? In reality, it’s to not panic. Don’t make quick decisions when it comes to your finances.

Sources:

“What Is Coronavirus?” Lauren M. Sauer, John Hopkins Medicine.

“How the coronavirus outbreak is affecting the global economy.” Al Jazeera News. March 2020.

“Fed cuts rates to blunt coronavirus impact, markets drop.” Lindsay Dunsmuir, Business News. March 2020.

“Coronavirus: Eight charts on how it has shaken economies.” Lora Jones, David Brown & Daniele Palumbo, BBC News. March 2020.

“Coronavirus: Italy bars fans from sporting events – as it happened.” Emma Boyde, Naomi Rovnick, Myles McCormick, Sarah Provan, Philip Georgiadis, Peter Wells, Matthew Rocco, Mamta Badkar, Financial Times. March 2020.

“IMF: Virus outbreak will slow global economic growth this year.” Al Jazeera News. March 2020.