WHAT CAN BE EXPECTED IN FUTURE ECONOMY DUE TO COVID-19

WHAT CAN BE EXPECTED IN FUTURE ECONOMY DUE TO COVID-19

According to McKinsey (march 16) there are two scenarios: Delayed recovery and Prolonged contraction.

A) Delayed recovery:

Large-scale quarantines, travel restrictions, and social-distancing measures drive a sharp fall in consumer and business spending until the end of Q2, producing a recession.

Consumers stay home, businesses lose revenue and lay off workers, and unemployment levels rise sharply. Business investment contracts, and corporate bankruptcies soar.

B) Prolonged contraction.

Demand suffers as consumers cut spending throughout the year. In the most affected sectors, the number of corporate layoffs and bankruptcies rises throughout 2020, feeding a self-reinforcing downward spiral.

The global economic impact is severe, approaching the global financial crisis of 2008–09. GDP contracts significantly in most major economies in 2020, and recovery begins only in Q2 2021.

IN ANY CASE, FUTURE WILL GO WILD ACCORDING TO EXPERTS FOR ALL COUNTRIES & SECTORS.

GDP .

OECD predicted that COVID-19 will lower global GDP growth by one-half a percentage point for 2020 (from 2.9 to 2.4 percent).

Bloomberg Economics warns that full-year GDP growth could fall to zero in a worst-case pandemic scenario (CSIS).

Rolling recessions are the likely economic impact of COVID-19 (Forbes).

Other estimations shows a huge impact in 2020 and a clear recovery a global level in 2021 (Rabobank).

Although COVID-19 will have an impact in all industries, worst cases will be related to travel and leisure.

Tourism and travel-related industries will be among the hardest hit as authorities encourage “social distancing” and consumers stay indoors.

IATA warns that COVID-19 could cost global air carriers between $63 billion and $113 billion in revenue in 2020.

Shares of major hotel companies have plummeted in the last few weeks, and entertainment giants like Disney expect a significant blow to revenues.

Industries less reliant on high social interaction, such as agriculture, will be comparatively less vulnerable but will still face challenges as demand wavers.

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