s Coronavirus chaos continues to shake the world, the reality of what will come next is starting to hit home. With many countries being forced to lockdown their citizens, the potential financial armageddon from this period could have an equally damaging effect as the virus itself.
In unprecedented times, it’s hard to know what the future will look like in 6 months or a year. The only sure thing about that near future right now is that it is going to be a pretty bleak one.
The Worrying Figures
Aside from the horrific daily count of new deaths that everybody has so quickly become accustomed to, it is the economic data that will also have a serious impact as we begin to move forward again.
The economy of China, where the virus originated, has started to report some numbers that give us insight into the immediate economic impact that lockdown visited on that country.
China’s factories’ output fell by 13.5% during January and February. Retail sales dropped by over 20% and the sales of homes dropped by almost 35%. These drops may not sound so drastic considering the severity of lockdown conditions that were imposed in China, but this is an economy that has reported year-over-year quarterly growth for more than four decades.
If the party is over in China, it’s only going to be a similar or worse situation in Europe and the US. Deutsche Bank predicts that China’s GDP will decline by 32% this quarter. Europe’s will fall 24% and the US by 13%
And these figures are based on the problems that the Coronvirus has caused so far. As the fight against the virus goes on, the economic outlook will only worsen.
Market Crashes & Job Loses
GDP figures are one thing, but how does this impact individuals?
The figures mean that the whole of the world needs to face up to a tough time where our very way of life may need reimagining.
If a vaccine is not discovered soon, it is quite likely that even after the worst is over that sporadic lockdowns by town, city or region could still become the norm.
The reality of large gatherings being allowed again is still some time away. The impact this has on everyday things taken for granted for so long is immense.
Drinking a coffee in your favorite cafe, having a beer outside with friends, or enjoying dinner out with a loved one. Even when these activities are allowed once more, they will be done under different conditions.
This means that less money will be getting spent. More people will be out of work. The pressure on governments to offer solutions will be huge. In Canada, the government implemented an emergency response benefit to assist those who were financially impacted by the Coronavirus. While these government benefits are essential and needed, they provided an additional strain on a falling economy.
The world’s biggest companies will struggle to produce their goods in the same way. The stock markets will continue to struggle and potentially fall into further freefall.
Mortgages will go unpaid. Grocery stores with empty shelves become the norm. People will be faced with the choice between paying their rent or buying food.
Economic armageddon seems a certainty and it will be tough for everyone, but it is surmountable.
All of the above and worse could become a reality, but times of adversity are also times of hope and new opportunity.
Many people’s working lives will change but this recent enforced shift to remote working could see employers recognizing that a better balance is needed between work and home in the future.
Millions of people will lose their jobs, but this will create opportunities once things start to get back on track. Those people who relish challenges could find themselves being offered positions that they would have never thought possible before.
And the human spirit is indefatigable. The world will be a new one but this will serve to drive inspiration and creativity. People will learn to adapt and prosper once more.
“IF YOU WORRY ABOUT FINANCIAL ARMAGEDDON, IT IS INDEED METAPHORICALLY THE TIME TO STOCK YOUR BUNKER WITH GUNS, AMMUNITION, CANNED FOODS, AND GOLD BARS”.Nouriel Roubini, American Economist
Things are bad. They are likely to get worse. But they will get better and with the right mindset, maybe this is the wake-up call that the planet and the people on it needed to make some seismic changes.
Financial armageddon will be a result of this crisis, but it does not need to be one that defines the rest of our lives negatively.