With implemented quarantine, the global economy will suffer because it forces all businesses to put their productivity on pause. The sheer sense of business existence is making money. If they stop producing goods or providing services, they stop making a profit. This makes them less able to pay taxes and employ more people, providing them with salaries (*read – mean of living). Yes, businesses can pay wages to the workers during the quarantine. For a month. Maybe two if they were profitable before. However, the more time the business doesn’t work – the more endangered its existence is, so people lose their jobs. They lose their jobs – they get less or no money. They have no money – they buy nothing but minimal food and means of living. People spend less – businesses that were still afloat, sell less and they need fewer people to work. People lose jobs. They buy less and… A vicious circle of COVID life.
Only think of it – we could solve it if we only could work and buy more from the companies that suffer from recession. However, traditional means of “working harder to overcome the crisis” are not available today. That’s where the 2020 recession differs from all the previous. We cannot go to work because of the quarantine. We buy less under such circumstances even if we have money. The circle becomes even more vicious. Crisis, social distancing, “stay-at-home” routine – all of it makes the new economical environment filled with unprecedented obstacles we weren’t taught to overcome. People cannot travel and support the tourism industry. They cannot go to cafes and restaurants, giving life to small businesses. No, we would love to, but we just can’t. Quarantine is like a rope around your neck – making you stay in one place so you just don’t die. Tearing the rope is hard. Bringing yourself together afterward is even harder. Unfortunately, quarantine accelerates the crisis. Below are some numbers, showing the experts’ forecasts and recent influences over the major industries because of the outbreak:
1) The forecasted global loss to the travel and tourism industry – almost 117 thousand million dollars, while in 2019 the post-COVID predictions were that it would increase by 26 879 million dollars. Asia is predicted to suffer the most, having 225 889 million dollars in 2019 and ending up losing a third of this sum in 2020.
2) Business travels expenditure reduction is forecasted to decrease by 404 billion dollars in China and 190 billion dollars in Europe.
3) Weekly global airline flights change from January 6 to April, 6 – 92% in Hong Kong, Singapore, and Italy; -79% in Spain; – 60% in the United Kingdom; – 50% in the USA.
4) Price of crude oil in U.S. dollars per basket is reduced from 60-70 to 20-30 (differing for Brent, OPEC basket, and WTI).
5) The number of vehicles lost due to auto plant stoppages (March 2020) – 1,700,000 units; in Europe – 880 000 units; in North America – 478 000 units.
6) The percentage of chemical production is decreased by 2.4% globally.
7) The film industry worldwide loss is 7 billion dollars as of March 2020. The predicted forthcoming loss is 10 billion dollars.
8) 75% of companies have supply chain disruption globally.
9) IT expenditure decreased to – 6% with mobile phones, -12% with PC and tablets, -3,3% with servers, -2% with IT services.
What are the future lessons from this COVID-recession?
- In Ukraine, we often say “Головне – здоров’я. Все інше наживне”, which is translated as “Health is the most important thing. Other things are attainable”. The phrase seems so easy and ordinary, like saying that 2+2 equals 4. Turned out, we were amateurs in health mathematics.
- We found out the other side of globalization.
- The unpopular jobs turned out to be the most necessary for society’s survival: medical workers, supermarket assistants and refuse collectors.
- Working from home is not as great as we imagined it would be, sitting in the office.
- Solving public goals is more important than increasing revenue while sacrificing them.
- The governments should not just give bailouts to the industries for the sake of giving. It should serve a purpose.
- The unbelievable cannot happen today. It already happened yesterday.
- The digital world is a “first aid kit”, keeping society alive during such unprecedented times.