Impact of Coronavirus on Global Economy: Affecting global shares, manufacturing, customers buying habitat, IT and tech industry (mobile web application development).
The novel coronavirus which originated in the Wuhan region of China’s Hubei province last year has killed more than 3,200 people and more than 94,000 people are found infected in more than 60 countries. It is a fatal epidemic and spreading to other countries as well. Last week, it reached Europe and the Middle East that sounded the tocsin of a global pandemic. Since then, the risks from Covid-19 are being evaluated aggressively across various asset classes and their impact on the global economy including share markets, different industries, travelling and others.
Economic Growth Become Stagnant
According to the Organisation for Economic Cooperation and Development (OECD), the world economy could see the slowest growth rate this year since 2009 due to the coronavirus epidemic.
The economy is calculated considering the percentage change in gross domestic product, or the value of products and services produced. Either it is evaluated for three months or a year.
The slowest growth rate not only results in reducing wealth but also jobs lay off.
If we consider the experts’ forecast, in 2020 the growth will be just 2.4% that was 2.9% in November last year.
There are chances, if the outbreak remains for a long time and becomes more intense, the growth rate could slide down to 1.5% in 2020. And the reason behind factories has suspended their operations and workers stay at their homes so that the virus can be contained.
If the Indian economy is concerned, no such effect of coronavirus has been observed yet. But we could see some adverse impact in the Mar-20 quarter due to a weaker China and global growth, and disruptions in the supply chain. Various sectors will be influenced due to the disruption in the supply chain including pharma, automobiles, electronics, and others.
Global Shares Take a Dip
The stock markets where companies trade in shares are witnessing shifts. It could affect investments in the form of pension or individual savings accounts (Isas). Major stock markets have seen its impact in the form of worst performance during the last week of February. Lowered since the 2008 financial crisis.
However, the European and US stock markets have seen some hike comparatively. It is because the countries decided to intervene to maintain economies from the adverse effects of coronavirus.
For example, the US central bank has reduced interest rates so that borrowing becomes cheaper and helps in improving the economy with spending.
Manufacturing Slowed Down
China is the world’s third-largest manufacturer and first largest exporter globally. But the spread of Covid-19 has decreased the activity in the so-called “workshop of the world”. Since the factories have stopped operations so that the virus could be contained.
Surfaced footage from Nasa pollution-monitoring satellites is the proof which showcases a significant drop in nitrogen dioxide level over the country. However, this is in part but an economic slowdown made it possible due to the outbreak.
On the other hand, the supply chains of big companies like JCB, Nissan and Diageo have also been disrupted due to the factories’ shutdown. Even Jaguar Land Rover imported car parts in suitcases in case some of the factories run out of parts for vehicles.
Travel Industry Impacted Massively
With each passing day, the number of corona infected patients is growing across the world. Countries are applying travel restrictions so that the virus can be contained there and not spread. The UK government has completely restricted all travel to the Hubei province, the place where the virus originated. Also, special travel advice is issued for Italy, the first European country with increasing corona infected cases.
It has adversely impacted the travel industry since airlines have slashed flights by a big margin and tourists are canceling their trips and holidays.
As per the ForwardKeys analytics firm report, the count for international flights booked from China is comparatively 55.9% lesser than the records from the same duration in the previous year. While VisitBritain says, around 415,000 travellers visited the UK in the 12 months to September 2019. But now they are being kept at home to keep the virus contained. This resulted in a huge loss in the UK travel industry revenue as the Chinese travellers used to spend three times more than on an average visit to the UK. It is calculated at around £1,680 each.
An increase in the cancellation of large events is proportional to the increase in the number of flight cancellations. This arouses a fear that the condition will continue to have the same impact on the industry hard.
Change in Customers Buying Habitat
The fear of a coronavirus outbreak is changing the buying habitats of the customers. They are avoiding activities like shopping to protect them from the risk of infection. It has reported a shortage of customer demand at car dealerships, shops, and restaurants.
Chinese automotive market recorded a drop of 92 percent in car sales during the first half of February. While the carmakers like Geely and Tesla are providing the online sale of cars so that buyers don’t require to hit showrooms.
Not even this, in the first half of 2020, the smartphone shipment will be affected badly. The tech giant Apple has already announced that there is low customer demand in the market due to the coronavirus outbreak.
The Tech Industry also shares a big part in the Global economy. But it has also been impacted due to the virus epidemic. It includes several big names like Facebook’s F8, Google I/O, the Geneva Motor Show, Mobile World Congress, etc. which are cancelling their industry events. While the renowned global mobile web application development companies are also getting affected with the Corona virus impact. A plunge is witnessed in the demand of web and mobile app development due to the manufacturing of products, and services offering get affected with the shutdown of the companies.
The Facebook F8 developer conference has been cancelled. It is the biggest event of the company where CEO Mark Zuckerberg was going to showcase the updates made for Facebook’s developments and challenges. However, the company has replaced it with local gatherings and online events.
A marketing summit scheduled to organize in early March has also been cancelled. It is expected to gather 4000 people from different countries.
The Oculus VR headset of the company is likely to be delayed in production.
The company’s Seattle office where a contractor was found coronavirus positive has been closed until March 9. And the employees are instructed to work from home at least till March 31.
Google encouraged its employees in the Seattle area to work remotely if possible. All the company offices in China, Taiwan, and Hong Kong have been closed temporarily.
The company has cancelled its Google News Initiative Summit scheduled to organize in Sunnyvale, California by the end of April 2020.
An annual I/O developer conference which was scheduled to be held on May 12–14 in Mountain View, California has been cancelled.
Google has completely restricted its business travel to China and Hong Kong.
However, Google’s Europe based offices are still open even after an employee in Zurich has been diagnosed
Microsoft announces employees who are living in the Seattle/Puget Sound area and San Francisco Bay Area and perform jobs that can be done at home should start from March 25.
The company warned investors that its revenue in the segment including Windows operating system and Surface devices, expected to miss earlier forecasts.
Twitter has withdrawn from the SXSW festival where CEO Jack Dorsey was going to address a keynote.
The company has restricted all his insignificant business travels and events for employees' safety.
All the employees have been encouraged to work from home.
Dorsey was going to spend a few months in Africa this year. However, the plans are being re-evaluated due to the Covid-19.
India’s IT industry which worth $185 billion is being said to be affected minimally. However, there is a chance of damage growing if the outbreak is not contained soon enough.
According to the Akhilesh Tuteja, Global Cyber Security practice co-leader, the coming 2–3 weeks will play a vital role in the country’s IT industry. If the virus is contained within this time, the domestic IT industry won’t get affected.
Tata Consultancy Services (TCS) one of India’s top IT firms has its large presence in China along with other brands like Infosys, Wipro, and HCL. However, many global companies have shut down their offices but these companies have allowed their employees to work from home or remotely from other locations.
As per the reports and estimates, the IT industry is safe now from the impact of the coronavirus outbreak. But the disruption in the supply chain can start damaging this sector in the coming future if the virus is not contained.
The coronavirus outbreak not only affected the economy, industries and other sectors of China but also the world is witnessing its severe effects in the form of a global economic slowdown. Because China is the largest manufacturer and exporter in the world. The factories’ shut down, disruption in the supply chain for other countries are hampering or hitting businesses and the economies of other countries. If the virus became more intense and remained for a long time, the world economy has to confront the more severe effects of the coronavirus outbreak.
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