COVID-19 effect on the economy

For most business owners, 2020 was set up to be another good financial year. From expanding companies to launching a new startup, COVID-19 has put a spanner in the works. All industries and sectors have been affected in one way or another, with 1 in 4 UK workers being faced with furlough not to mention the struggle for the self-employed.

​COVID-19 could affect the global economy in three main ways: by directly affecting production, by creating supply chain and market disruption, and by its financial impact on firms and financial markets. It seems the only industries experiencing a small benefit from the outbreak is cleaning services, delivery services, supermarkets, some game sellers, streaming sites and Amazon.

All over the world, businesses big and small are adapting to the pandemic as almost everyone that can, working from home. But, there is hope. Despite the large dip in sales, business owners are finding new ways to stay afloat such as offering non-contact delivery services, gyms have set up virtual services using this downtime to reassess their long-term plans.

Inevitably, some businesses will not survive this period and undoubtedly the economy will not recover immediately. China’s economy shrank by 6.8% in Q1 2020 – the first contraction since records began in 1992. But while the country started out as the worst affected by the disease, cases have dipped to an all-time low and Chinese authorities have pushed to restart the economy.

Last month reports presented forecasts of Europe’s biggest economic slump since just after World War 2. France and Italy were both officially in recession after two consecutive quarters of economic contraction, although both countries have now begun reopening, and France’s economy shrank by the largest percentage since 1949.

All we can do now is hope that all countries follow the right guidelines to reduce the virus so things can get back on track for everyone and the economy doesn’t become too fractured.