The COVID-19 pandemic is having a significant impact on the lives of everyone. As it stands, millions of people are focused on the spread of the virus in various countries, while others are observing the necessary measures to prevent the spread and contact of the illness. However, the social-economic impacts of the novel coronavirus have started to creep in households, which is a scenario that is expected to be experienced in 2020.
Here are some of the economic impacts to expect as days roll.
1. Uncertain Income
Millions of individuals have already lost their jobs owing to the spread of the virus. These individuals have families to support, and without a continuous flow of income, borrowing from financial institutions has become the new normal. Experts have already hinted at an impending increase in the use of installment loans in the weeks and months ahead as most of the families will lose jobs and look for alternatives to support their families. This outlook is backed by the record-breaking number of individuals who recently filed for unemployment. While the U.S. and other countries scramble to send money to citizens as a way to curtail the economic collapse, many believe these measures won’t be enough.
2. Decreased Purchasing Power
As the spread continues to spread across the globe, most of the people continue to exhaust their financial reserves, which is a clear indication that they are plummeting towards dangerous economic zones. To attain financial and economic stability, most of the families will deliberately lower their purchasing power and only consider what is necessary for survival. Families will forego the use of luxury products and premium products, which are used to demonstrate high buying power among consumers.
3. Reduced Consumption Habits
Before COVID-19 was declared a global pandemic, consumption habits such as impulse buying, among other aspects that involve excessive use of money, were witnessed across the globe. However, with low-income fears, most of the families have significantly reduced their consumption habits. Individuals and families are only consuming basic commodities while at the same time avoiding unnecessary purchases that amount to irresponsible use of money.
4. The Decline in Savings and Investments
Most of the families save their excess money or invest in various income-generating investments. However, most of the people are no longer saving, especially those who have already lost their jobs. They now depend on their savings to support their families, which is also having impacts on the investment sector. No investor is willing to channel his or her resources with the current economic uncertainty.
5. The Collapse of Small Companies
Small enterprises such as mom and pop restaurants and corner stores are likely to experience considerable challenges in their operations because they do not have large financial reserves to overcome the economic impacts of this pandemic. Some of them have already collapsed after an acute decline in sales, while others have been forced to shut down by authorities as they operate in densely populated areas where transmission of the disease is the highest.
6. Construction and Manufacturing Slowdown
A slowdown of construction projects and manufacturing is the most significant economic impact of COVID-19 pandemic that will be experienced across the globe. Human resources have been the first culprit in the expanding economic shutdown around the world. Additionally, most of the manufacturing companies in most-hit countries such as China, Spain, Italy, and now the United States are not operating. This will soon lead to inflation as people struggle to get basic commodities from the stores.
At the beginning of 2020, COVID-19 was only seen as an infection that could be controlled in China and was not a threat to the world. However, two months down the line, most of the countries have already closed borders and are in total lockdown, which has had significant microeconomic problems.