Coronavirus news: the impact of lockdown revealed

Coronavirus news is showing no signs of abating, but the big question is this: how long is the economic impact of the Covid-19 lockdown going to last?

                                

Coronavirus news never seems to stop. Every day, we are confronted with grim stories about the number of deaths continuing to rise – and harrowing stories from the healthcare workers bravely fighting the disease in our hospitals. According to Johns Hopkins University, there are now more than 5.6 million confirmed cases globally, and at least 351,000 deaths.

Many countries have been enforcing strict restrictions on their citizens to stop Covid-19 spreading. This has ranged from shutting shops and restaurants, to forbidding families from meeting up with one another. Some nations have banned travellers from especially hard-hit countries, or have told overseas arrivals to quarantine for a two-week period.

But what has been the impact of the Covid-19 lockdown? Here, we’re going to delve into some of the statistics that show how these drastic measures have affected our daily lives, the stock market, and the global economy. 

Covid-19 lockdown impact: in numbers

A new report by the Committee for the Coordination of Statistical Activities provides a sobering insight into lockdown’s impact.

As you’d expect, global trade is in freefall – and China, the country where the pandemic began, doesn’t necessarily offer an optimistic picture of when things will return to normal. Even though factories in this manufacturing hub have started to reopen, some are only operating at about 60 per cent of their normal capacity. Lockdowns have been lifted in many of the nation’s towns and cities, only to be reinforced after a second wave of new infections.

This, when coupled with the fact that demand for many Chinese products has dried up as Western nations continue to grapple with their own cases, shows the impact of lockdown is likely to be felt for months – if not years – to come. Some experts believe that measures like social distancing will need to be in place until a Covid-19 vaccine is found. This would be calamitous for the hospitality sector – especially bars and clubs – as they’ll only be able to operate at 50 per cent of their normal capacity, if at all.

The coronavirus lockdown impact has also been keenly felt on the already embattled aviation sector. There are conflicting projections on what the long-term picture for airlines looks like, but they are united by a common theme: the future will be bleak. The International Air Transport Association believes it will take three years for passenger numbers to return to the levels seen before the pandemic – a far cry from the fast “V-shaped” recovery seen after outbreaks of SARS and MERS in the past 20 years. 

Here’s another startling statistic concerning aviation: things may never be the same again. IATA’s figures show the average length of a trip fell by 8.5 per cent when Covid-19 hit, and by 2025, this figure is still expected to be some way off 2019 levels. Habits are expected to shift, with short-haul flights becoming more popular than longer routes. Business travel could also increasingly become a thing of the past as remote working gains popularity, with firms starting to realise that teleconferencing is less expensive, more environmentally friendly and not too detrimental on productivity.

Sadly, coronavirus news suggests many businesses are going to struggle to survive – despite generous loan schemes and tax relief measures brought in by some of the world’s biggest economies. Just look at tourism. International tourist arrivals could fall by 78 per cent this year, starving companies of much-needed revenue during the crucial summer months. These cash reserves normally sustain firms when things quieten down over winter.

Stock market news during the coronavirus

Some analysts have been bemused by how quickly the stock market has bounced back, even as the pandemic continues. Traders appear to have been willing to shrug off gloomy numbers that suggest record levels of unemployment and claims for benefits. These figures clearly show consumer spending is going to remain supressed for a long time to come, and this will affect the performance of most constituents on the world’s major stock markets.

So… what’s driving this optimism? Well, a mix of factors are at play. Wall Street has been buoyed whenever the US has unveiled new measures to try and stimulate the economy. Even though some scientists have expressed alarm at the rate that America has started to reopen, with the country recently passing the grim milestone of 100,000 deaths, this has contributed to an upbeat outlook for the S&P 500. Positive news on clinical trials and human studies for Covid-19 vaccines have also driven recent surges.

There are fears that the coronavirus impact on stock market performance is far from over – especially if a dreaded second wave of infections comes in the winter. Alarm is growing that the surge we’ve seen since the middle of March is unsustainable. Instead of a V-shaped recovery, meaning things go back to normal instantaneously once the pandemic ends, a sizeable number of pundits believe a U-shaped recovery is more likely. This would prolong the pain for businesses, investors and consumers – with a slow recovery only starting to commence late this year or early next year.

As a global chief investment officer at a large US fund management company told Reuters: “The recent moves in stocks are not justified by any concrete development either in the form of a vaccine breakthrough or on the economic front. The coronavirus lockdowns are here to stay for now and as such the risk is more to the downside for stocks.”

Coronavirus impact on crypto

When the crypto markets embark on a parabolic bull run or a cataclysmic crash, it’s all too often difficult to know the reasons why. As such, pinpointing how Covid-19 will impact the prices of Bitcoin, Ether and other cryptocurrencies may well be an impossible task.

One major school of thought centres on how countries are printing off trillions of dollars in cash to try and prevent an even worse economic contraction. This could have an inflationary effect on major fiat currencies, driving down their value. Crypto advocates say this gives BTC a compelling advantage, especially considering it has a fixed supply of 21 million that cannot be raised.

As we’ve seen, coronavirus has had an impact on practically everything… one way or another. Things are likely only going to get worse before they get better, and the economic fallout is shaping up to be long-lasting.

FURTHER READING: Which investments are the best during a recession?

FURTHER READING: Stock market crash 2020: what is going to happen next?

Image: Shutterstock