Coronavirus (COVID-19): The global economy affected by a pandemic
On April 30, 2019, the WHO classified the epidemic called COVID-19 or commonly called Coronavirus as a “Global Health Emergency”. This pandemic is already developed in more than 110 countries, with more than 130,000 infected and more than 5,000 registered deaths.
Before these figures reached this extreme, many international companies had already reacted by stopping their operations. China, one of the largest merchandise exporting countries, is one of the most affected by this pandemic since the virus is believed to be from this country.
How does Coronavirus affect the global economy?
As China is one of the most important countries for the global economy, a decline in its development is to be expected. In addition, tourism, the export of goods and the drop in demand are affected by this pandemic.
According to the Organization for Economic Cooperation and Development (OECD), the world economy is expected to reduce growth this year by 0.5%.
COVID-19 and China
Unlike other pandemics, the coronavirus has started in an industrial country, so the world economy is directly affected. China has a very important weight in relation to GDP, tourism and, of course, exports.
A series of measures and restrictions have been taken to prevent the spread of this virus, which is why many factories have been temporarily closed, others chose to continue operations, but the work hours have been significantly reduced. Trying to restrict the spread of this virus in this way also has its side effects. Many companies that import or export products to and from China, such as technology, automobiles, or the pharmaceutical sector, have lowered their demand.
That is why when we talk about the demand for that country, chaos has been generated. Entrepreneurs’ confidence has been greatly impacted when investing. A clear example of this is tourism, many trips have been restricted to that country as a measure to restrict the spread of the virus, others simply choose to avoid trips to this country.
COVID-19 and Italy
One of the countries most affected after China by this virus in Italy. About 15,000 infected people and more than 1,000 deaths have been recorded.
In the country, the most productive cities have been paralyzed, thus causing possible devastation in its economy. The authorities of that country expect that the restrictive measures will affect the Italian industry as little as possible.
Some of the measures taken by that country affect tourism, since the entrances and exits of a vast area in the north have been delimited, which goes from Milan, the economic capital, to Venice, the mecca of world tourism.
In Lombardy, events that gather many people have been banned, such as discos, pubs, schools, churches, among others.
For the recession, the Italian government has taken as a measure to prepare compensation for workers, and companies in the territories that are most affected.
COVID-19 and Black Monday
Last week, the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and among its oil partners Russia, failed to establish an agreement to reduce the production of so-called “black gold” and be able to sustain its prices, due to said pandemic. Therefore, Saudi Arabia decided on March 8 to initiate the largest cut in its barrel prices in 20 years.
This was the largest drop in the stock on Wall Street in 11 years. The Dow Jones Industrial Average lost 7.79% to 23 thousand 851.02 points, with a fall of 2,000 points. Technological Nasdaq lost 7.29% to 7,950.68 units and the S&P 500 of the largest companies on the stock market fell 7.60% to 2,746.56 points.
According to Howard Silverblatt, an indexing specialist at S&P Dow Jones Indices, the S&P 500 lost about $ 1.87 trillion from its record on February 19.
If we take it to the population of the USA, it translates into a loss of US $ 5,682 per inhabitant.
But the USA was not the most affected, the main European stock markets sank at the close. In addition, the stock market in Latin America fell by about 10%, and the dollar deliberately increased its price.