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The Covid-19 is changing our economies
Article originally posted on The Straits Times.
Early this year, a deadly microscopic predator sent humans into hiding and slammed the brakes on global commerce.
Economic destruction like this has not been seen since the Great Depression. Here, we illustrate the new coronavirus' effects on basic metrics such as gross domestic product and unemployment, the collapse in demand for fuel, the rapid adoption of telehealth, and the surge in liquor purchases. This is a new economy built on fear.
The virus recession is expected to outstrip even the most pessimistic of early forecasts. With strict lockdowns in place across many major economies and a growing recognition that it will be a long path back to normality, Bloomberg Economics has revised its estimate for global contraction this year to 4 per cent.
As the global economy contracts, businesses are reducing costs through temporary and permanent job cuts. In the United States, the world's biggest economy, the percentage of people who are unemployed exploded from a 50-year low in February to the highest level since the Great Depression in April.
Furloughs in Europe are helping limit job losses. But the outlook remains bleak for the world's workers. The International Monetary Fund forecasts a surge in the annual unemployment rates of developed economies, including the US.
Meanwhile, Germany and Japan are expected to fare better.
The United Nations projects a widespread decline in hours worked as businesses shutter.
Women hold a disproportionately large share of jobs in the fields most at risk of being affected by the pandemic, according to the International Labour Organisation.
Worldwide, 53 per cent of women in the informal economy are in sectors deemed to be at risk of high to medium-high impact from the pandemic, compared with 44 per cent of their male counterparts.
A majority of only the highest-paid US workers can do their jobs remotely.
When the global recovery begins, some businesses will automate operations, leaving workers in the lurch. Countries such as South Africa, Argentina and Italy face a substantial blow to growth and have a high vulnerability to automation. When the recovery comes, some workers may find their jobs taken over by robots.
USE OF RESOURCES
Lockdowns gutted demand for fuel, and a price war between Saudi Arabia and Russia flooded the market, leading oil futures to turn negative in April.
The historic move had dramatic consequences for companies and government balance sheets. Much now depends on whether the extreme changes to work, travel and commerce are brief, temporary shifts or permanent readjustments.
Government efforts to keep people at home and slow the spread of the disease have stripped global oil demand. Excess crude drove US futures into negative prices for the first time ever.
U.S. DRIVERS IN PARK, CHINA IN GEAR
Americans stopped driving to the office and regularly filling up their tank. In China, people are driving more instead of taking public transportation.
FLIERS ARE GROUNDED
The number of airline passengers worldwide plummeted as the virus spread.
EARTH CATCHES A BREAK
With oil use down, global emissions are forecast to fall (but rally with the recovery).
The pandemic has transformed the way we spend money. At the beginning of April, US consumer confidence suffered a record weekly decline. Stores and malls were empty or closed, and online retailers were struggling with shortages.
Instead of risking a visit to the doctor's office, patients are starting to seek virtual advice. And many are self-medicating.
With people feeling poor sentiments about the economy, the buying climate and personal finances have also been affected. This was especially so when many shops were closed during the lockdowns and social distancing rules kept consumers home.
But one sector is booming - panic buying has depleted online supplies.
Online shopping has been plagued by shortages since the onset of the coronavirus pandemic, according to data compiled by market research firm Euromonitor International.
Inventories of disinfectants sold on e-commerce platforms dwindled as the virus spread.
The pandemic has also accelerated patient adoption of virtual care services.
And when all is not well, drinking appears to lift the spirit of many people.
Liquor stores, one of a few retail categories open under Britain's lockdown, saw sales surge almost a third in March - the biggest monthly rise since January 2011.