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POST COVID-19 GLOBAL ECONOMIC OUTLOOK: 2020 & Beyond
Strange but true, I previously had plans to address the role of the media in the war against insurgency since the inception of the President Buhari led administration in this week’s episode of my weekly column but I changed my mind after I had an interesting video conference meeting on the progress report of our website last Wednesday. The next day, I was also part of a two-day Trade Training hosted on Microsoft Teams and it was a wonderful experience. We had the opportunity to play games, share documents, chat and discuss issues that are central to our job responsibility and required deliverables.
Evidently, the coronavirus pandemic has brought more than a new type of disease to us, it has also brought a new way of doing things, or better put, it has accelerated the drive towards technology and our general view of it.
According to Wikipedia.com, the pandemic caused the largest global recession in history, as global stock markets crashed in March 2020, with falls of several percent in the world's major indices. As the pandemic spreads, global conferences and events across technology, fashion, and sports are being cancelled or postponed. While the monetary impact on the travel and trade industry is yet to be estimated, it is likely to be in the billions and increasing.
In consequence, today’s piece will be devoted to discuss the economic impact of the pandemic on the aviation, entertainment, hospitality industries as well as the oil and gas, and international trade sectors. These five sectors are unarguably the worst hit by the ongoing coronavirus pandemic. On the flip side, we would also discuss innovative products like ZOOM, Google Hangout, Skype, Microsoft Teams and how they are laughing to the bank in the midst of a worldwide recession caused by the pandemic.
Aviation & International Travel - The pandemic has had a significant impact on the aviation industry due to the resulting travel restrictions as well as slump in demand among travelers. Significant reductions in passenger numbers has resulted in planes flying empty between airports and the cancellation of flights. In many of the world's cities, planned travel went down by 80–90%. As of March, the International Air Transport Association (IATA) had reported an estimated revenue loss of USD252 billion in the sector globally.
In a typical month, the United States Department of Transportation receives approximately 1,500 air travel service complaints and inquiries. However, in March 2020 and April 2020, more than 25,000 air travel service complaints and inquiries were filed,1 many of which concern refunds for cancelled and/or postponed flights. 2 Airlines and ticket agents have also requested guidance about their refund obligations for cancelled and/or postponed flights.
Entertainment & Hospitality – I was impressed when I heard about the innovative way the government of Cyprus is planning to revive the tourism and hospitality sectors in the midst of the coronavirus pandemic on CNN about a fortnight ago. The government said it will cover the costs of accommodation, medicine and food for any travelers who contracts COVID-19 whilst visiting the region.
Similarly, the film and entertainment industry, in general, has experienced substantial negative impact; movie theatres have been shut down, art exhibitions, movie premiers and musical concerts have either been cancelled or postponed. In fact, multi-billion-naira worth of deals has been lost in the sector according to the founder of NairaMetrics – Ugochukwu Obi-Chukwu.
Oil and Gas, & International Trade: Oil and Gas dependent countries like ours are witnessing stints of unprecedented hardship as a result of the double edge sword of the coronavirus pandemic and an oil price war orchestrated by Saudi Arabia and Russia. The Nigerian government recently released plans to edit the 2020 budget projections to accommodate the present realities; USD30 per barrel and a daily production of 1.7million barrels per day. The sector has been badly hit by the pandemic, since the lockdown and travel restrictions have led to a huge drop in oil demand and crash in crude oil prices globally. Even the intervention of OPEC+ and top oil-producing countries through output cut has still not impacted on oil prices or stabilized the market.
While speaking during a live webinar presentation organized by FCMB Plc on the topic, “COVID-19 and Economic Downturn Response,” NairaMetrics’ Founder, Ugochukwu Obi-Chukwu, noted that trade will be negatively impacted, owing to the shutdown of factories, reduced access to raw materials and commodities due to supply chain challenges. Trillions of naira worth of trade for both imports and exports will be lost due to the lockdowns, seaports and border closure. As China, is crucial to global trade with its current integration in the global value chain and main supplier and buyers of intermediate inputs, the disruptions it is dealing with due to the disease will affect trade.
Technology to The Rescue
As companies rapidly — and in some cases also permanently — move towards remote working, the market for digital collaboration tools such as Microsoft Teams, Google Hangouts and ZOOM is likely to grow quickly. ZOOM has already experienced a 50% increase in its share price since the start of the year. (Source: Covid-19 and digitalization: 4 areas of tech set to boom post-pandemic)
Obviously, as COVID-19 continue to spread and unfortunately, take more lives, the use of technology and technological inventions to combat the disease itself and cushion the physical and psychological effects of social distancing becomes more apparent, more and more people will continue to turn to technology to bridge the gap.
What The Future Holds: 2020 & Beyond
According to an article sourced from the IMF’s official website, for the first time since the Great Depression both advanced economies and emerging market and developing economies are in recession. For this year, growth in advanced economies is projected at -6.1 percent. Emerging market and developing economies with normal growth levels well above advanced economies are also projected to have negative growth rates of -1.0 percent in 2020, and -2.2 percent if you exclude China. Income per capita is projected to shrink for over 170 countries. Both advanced economies and emerging market and developing economies are expected to partially recover in 2021.
Conclusion
Deductively, the effects of the coronavirus pandemic are far reaching and government all over the world with continue to battle between saving lives and/or livelihoods. As more countries reopen and ease lockdown restrictions in a bid to ameliorate the effects on their economy, organizations and businesses need to fundamentally rethink what creates value, what is important right now and in the future, and what role digital innovation can play in making new things happen, THE FUTURE IS DIGITAL.
Oluwole Olusanya is the Founder and
Chief Executive Officer (CEO) of one of the fastest growing lifestyle blogs in
the country. He is a banker, writer, blogger, public affairs analyst and a tax
consultant. He anchors Trending Topics on SHEGZSABLEZS’ Blog where he
shares his thoughts and opinions on trending issues.
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