Impact of Coronavirus on Businesses Worldwide | SMB Compass
Ezra Cabrera | January 2, 2020
The coronavirus (COVID-19) pandemic which is presently sweeping the world is having an enormous and deleterious impact upon the global economy. Indeed a worldwide recession seems inevitable at this point. Current indications are that this upcoming meltdown might equal or even exceed the one that occurred in 2008.
This pandemic is unprecedented and understandably its consequences cannot be accurately predicted. Clearly it has already affected the world on multiple levels. Its impact on mental health and social relationships is devastating. And this situation will only deteriorate further as the number of fatalities increases and people continues to lose their sense of security. The closures of so many businesses and widespread lay-offs only exacerbate the problem.
The Extent of the COVID-19 Pandemic Around the World
It seems that no matter where you look within the business world, the detrimental impact which the COVID-19 pandemic is having is immediately apparent. First of all, the stock market has all but crashed and a substantial number of individual savings accounts have been affected by the sudden drop in stock prices.
Investors are starting to panic, and they have good causes too. If recession bites, those stocks won’t recover for some time and fortunes will be lost even by those shrewd enough to have actively begun reshaping their portfolios.
Many governments have enacted state-wide quarantine measures to try to slow the spread of this disease, and this is one of the main reasons why the impact of this pandemic on business has been so devastating. So much of the manufacturing industry and even more small businesses ground to a complete halt. And while giant companies have the funds to weather down this slump, smaller businesses don’t boast any such resources. As such they are the most likely to close down completely.
One also should not forget that the reduction in manufacturing means a reduction in supply. Considering there are over seven billion consumers on the planet, even small delays in producing essentials present a huge problem. Right now shortages of some basic products are just beginning to affect some states. If the pandemic and consequent quarantine continue, these shortages will go from being an irritation to an outright disaster.
Some of the leading corporations, such as Tesla, are presently adapting their facilities to produce ventilators and other necessities. However, those are tools specifically needed in the battle against the pandemic. No-one yet knows what will happen when people begin to run out of household essentials.
Government Response to Coronavirus: The Good and The Bad
All things considered, one also needs to take account of the fact that humanity will indeed run out of food supplies eventually. With the quarantine active in so many places, will there be enough manpower and supplies to work the farms? Such concerns might seem exaggerated right now, but nobody can accurately predict the future scope of the COVID-19 pandemic. So, who’s to say how exactly how it will turn out?
The good news is that it seems that governments in some states are taking the situation very seriously. There are specialized options for coronavirus financing in Australia, the US, the UK, and some other countries. Financing on special terms should help small businesses, in particular, to get through the slump without failing completely.
The majority of financial aid programs are designed to help cover medical expenses and unexpected staff leave. There are also programs that should help businesses to acquire the necessary supplies to enable the protection of their workers.
But unfortunately, many governments around the world do not provide such aid. Moreover, obtaining business loans is getting even harder for small businesses. Without this kind of support, they have little to no chance of weathering the upcoming storm.
The truly important thing to understand is that the large-scale failure of small businesses would not only present a problem for those businesses. This is a situation that impacts everybody. After all, over 80% of all the world’s businesses are categorized as “small”, and as such their failure could precipitate a global economic collapse.
Big corporations are powerful and hold most of the money. But they are incapable of filling the holes that would be left should a great number of smaller companies fail to recover following this ordeal.
Small Business Is In Trouble: Is There Any Hope?
It doesn’t seem like there is anything bright on the horizon for small businesses. The global economy as a whole is not looking toward a bright future. This problem is further exacerbated by the fact that not only finances difficult to find for business but that it itself is in short supply. Because of the stock market crash and sundry associated factors, many finance institutions themselves are on the brink of bankruptcy.
Should banks and other top finance providers fail under the pressure of this crisis, it’s hard to imagine just how bad things will eventually become.
The only possible solution is for governments everywhere to offer tax relief and a package of public guarantees. This is necessary to help businesses to recover as soon as possible once the quarantine has ended.
In the meantime, the global scientific community needs to pull together to develop a vaccine for the virus. Stopping the pandemic is a priority for the entire planet. It is no longer merely a matter of minimizing the number of deaths. It’s no exaggeration to say that the future of the whole world economy depends upon it.
In Conclusion: Will COVID-19 Pandemic Trigger a Global Recession?
As things stand now, the recession is inevitable. The only question is how bad it’s going to be. If governments worldwide take a more proactive role in protecting businesses, there might be a chance to keep the negative impact to a minimum.
From where we find ourselves today, even if the pandemic was to end tomorrow businesses would need no less than six months to recover. Many would be unable to do this at all. This is a time when finance for small businesses will come to play an even more important role. Engaging the services of financial advisers would be a helpful place to start.
The crux of the issue though is resources. There is a high demand for many such resources today, yet supply shortages won’t be rectified anytime soon. Even with the return of Chinese factories, their production facilities are not yet up to even 50% of capacity.
The recovery process is already slow and the fact that the world is so interconnected only hinders this situation. Not only does being a close global community increase the risks of the virus spreading, but it also means problems in one country soon affect everyone else in some way.
Conversely, taking a global approach to the fight against the pandemic quite obviously has its benefits, but while the potential is there humanity is not yet ready to function as a single unified community. Perhaps this crisis will provide a push in that direction. One thing is for sure though, no one country can overcome the consequences all on its own.