Global Pandemic Economic Report by Christian Ellul
During the Coronavirus Outbreak, it is vital to understand the direction of the market and the global economy is headed. This might help you identify the possible route that the future will take. Unless you know these things, your business is exposed to a higher risk of collapsing if a second wave of the virus hits. Experts such as Christian Ellul have advised that the world economy might yet struggle to survive a second wave if there is one.
In the past few months, since the Covid-19 pandemic, the economy and the market have kind of travelled two different paths. Millions of individuals have since signed for unemployment, and no one is entirely sure about the future. Everyone’s financial conditions have been very uncertain, especially those within the developing economies. A global recession is only around the corner at this point.
Though some countries are slowly considering reopening non-essential businesses, it is more of a test to find out which metric, whether economic numbers or the stock market data is working correctly.
The Market Economy Might Crash
Since we started by mentioning that a second wave of the virus could cause more turmoil, let us look at some of the sectors that will suffer the most.
Most travel companies, such as cruises and airlines, have already experienced a significant fall in stock price. This was prevalent from march to around mid-July when certain countries started to ease travel restrictions. Clearly, in case of a second wave, transportation stocks will be sent plunging through their initial lows. Note that these are some of the sectors that have, for a long time, dealing with high fixed costs and meagre profit margins.
In the case of a second wave of the COVID-19, there will be an increased number of unemployment applications alongside unemployment enhancements that shall have already expired. This will translate to significantly reduced levels of disposable income, so there will be little to no spending among consumers. Since there are high chances of a second lockdown, it is advisable to approach sectors heavily dependent on consumer expenditure carefully. A good example is the deferral of home improvement plans that would affect stocks such as Home Depot and Lowe’s.
With reduced manufacturing, air travel, and industrial activity, energy is in a terrible position, especially if there is going to be a second wave of the virus. In the past few months, we have seen a sharp rise in oil prices. Since things have not gained stability, this sector will experience even a severe problem as the oil prices might treble.
Some Sectors Might Benefit
If there is a second lockdown, there are those sectors that have good chances of making huge prices. We have mentioned some of them below.
There is a possibility of a second wave, and companies that sell consumer staples will make vast sums of money. However, they will face minor challenges since the second wave might have an impact on transportation.
Instead of collapsing, due to the second lockdown, technology will thrive more. Many companies will instruct their workers to work from home, thereby giving tech companies a chance to make huge profits.
If the virus spikes further, markets will depend on healthcare news for consistent, accurate updates, just like it happened during the first wave. Many healthcare companies are already innovating in many ways. Innovations such as telemedicine are already becoming common in many countries.
The Bottom Line
No one is 100% certain whether there will be a second wave of the virus. However, this article highlights what should be expected in case it happens. As you can see, not all sectors will face negative impacts. However, the second spike might cause more destruction compared to the first wave of the virus.
Health Care systems potentially could get overwhelmed more significantly this time if a second wave of coronavirus emerges and that will affect the economic activity even further, especially on a long term scale.