Counting the cost of the coronavirus

The global economy is reeling as the coronavirus shuts down air travel and tourism, dampens trade, and forces changes to society. Insight looks at the toll on various sectors, and what lies ahead.

Grappling with a triple whammy global crisis

In the span of a few long weeks, the world as we knew it and most of the bold projections about what lies ahead have been upended.

When business and political leaders met at the annual meeting of the World Economic Forum in Davos in January, there was much talk about addressing climate change, managing the trade and technology tensions between the United States and China, and pondering the threat posed to workers and societies by rapid advances in artificial intelligence (AI) and robotics.

US President Donald Trump was busy trumpeting his plans to keep America great in his second term, after its “amazing comeback” under his leadership.

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Lessons already learnt, and more to come


An Indonesian police officer spraying disinfectant at a local school in Palu, Central Sulawesi, on March 20, 2020. PHOTO: AFP

One day, 2020 will probably come to be known as the year the animals got their revenge and put humans in cages.

How else to describe the plight of the elderly woman in Italy – now the nation that has logged the most coronavirus deaths – who could only watch as her dead husband’s body was taken away for a funeral she was not allowed to attend because of the strict quarantine orders placed on her?

Or the family near New York where three of the seven who caught the virus died and the others live on, wondering if the only reason the doors would open for them is for another householder to be released into Death’s sly hands?

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Most airlines could become bankrupt before June is here


Grounded airplanes of Austrian Airlines parked at the Vienna International Airport last week. PHOTO: EPA-EFE

For an industry already struggling with the unpredictable cost of fuel, over-regulation, nationalistic obstacles and criticisms from climate activists, the coronavirus is the cruellest – and possibly fatal – blow.

A dramatic fall in demand resulting from unprecedented border shutdowns across the world to contain the pandemic is threatening to take out almost half the global carriers, according to some estimates.

As Mr Shukor Yusof of aviation-centred Endau Analytics tersely notes, all this seems surreal, given that just three months ago, in December last year, the International Air Transport Association (Iata) was expecting the airline industry to register a net profit of US$29.3 billion (S$42.3 billion) this year.

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Manufacturers, exporters braced for disruptions


Manufacturers and exporters in Asia may suffer a new wave of supply-chain disruption due to lockdowns and border closures around the world. PHOTO: BLOOMBERG

Exporters and manufacturers in Asia may suffer a new wave of supply-chain disruption even as the lockdown eases in China.

The latest supply shock is adding to the gloomy outlook for global goods and services demand amid volatile stock, credit and currency markets.

In Singapore, where non-oil domestic exports (Nodx) have been on a declining trend since late 2017, outward-oriented sectors such as manufacturing and wholesale trade are likely to be the worst hit.

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Tourism sector struggles to keep afloat amid travel slowdown


Mr David Lim, who manages trampoline park Bounce Singapore, virtual reality arcade Zero Latency and treetop obstacle course Forest Adventure, says business is down by about 60 per cent year on year, as knock-on effects of the coronavirus outbreak – including booking cancellations – take their toll. ST PHOTO: NG SOR LUAN

As with many local businesses in the tourism sector, GTMC Travel had hoped that last week’s school holidays would provide a much-needed boost.

The travel agency, which handles both inbound and outbound travel bookings, had already seen business tumble by 80 per cent earlier this month amid the global spread of the coronavirus.

But with more countries now imposing travel restrictions and a spike in imported cases here prompting new rules that essentially put a halt to travel, bookings for the March holidays also fell through.

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Needed: A shot of vitamin M(oney) in food & beverage sector 


Business in the F&B sector has reportedly gone down 50 to 80 per cent, in an industry which contributes to 0.8 per cent of Singapore’s gross domestic product. PHOTO: ST FILE

At Summer Hill, a two-year-old casual French restaurant in Sunset Way, business has held steady despite the chaos created by the coronavirus pandemic.

Singaporeans are still turning up to dine there, attracted by the outdoor seating area, which is surrounded by plants. Social distancing is all the rage now.

Chef-owner Anthony Yeoh, 38, says: “I have a regular who normally reserves a table inside and the other day called to make sure she got an outside table for dinner. And even before the calls for social distancing, our tables weren’t cramped together as we aren’t a high-turnover operation.”

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It’s a war, not just an economic crisis, experts say


The final numbers of the day are displayed above the floor of the New York Stock Exchange stands empty as the building prepares to close indefinitely due to the coronavirus disease outbreak in New York on March 20, 2020. PHOTO: RETUERS

We’re not just dealing with an economic crisis, say growing numbers of economists, when asked how to respond to the Covid-19 pandemic. This is a war, and it has to be fought on a war footing.

With infection rates rising exponentially and lockdowns, travel bans and social distancing measures spreading everywhere, most economic activities – other than the provision of essential goods and services – have all but stopped.

Economic projections of even just two weeks ago are rapidly becoming obsolete. A global recession is now the baseline forecast. Europe and Japan are almost there already. With unemployment skyrocketing, the US is on track to follow; the majority of economists polled recently by the University of Chicago’s Booth School of Business predict a “major recession”.

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How S’pore bounced back in the past


A patient being wheeled into Tan Tock Seng Hospital during the Sars outbreak. PHOTO: ST FILE

Oil and share prices in free fall. Entire countries closing off borders. Healthcare systems overwhelmed.

With the Covid-19 pandemic exacting a rising toll and uncertainty over how long it will last, the world is finding out the limits to what central banks and monetary policy can do.

Take the United States Federal Reserve’s latest moves. Despite slashing US interest rates to near zero, and injecting US$1.5 trillion (S$2.2 trillion) into financial markets, US stocks have been on a roller coaster ride, at one point nearly erasing all of their gains since President Donald Trump took office three years ago.

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Why the economy is in great danger


Closed shops and restaurants seen in Manhattan’s Little Italy last week in New York City. PHOTO: AFP

To understand why the world economy is in grave peril because of the spread of the coronavirus, it helps to grasp one idea that is at once blindingly obvious and sneakily profound.

One person’s spending is another person’s income. That, in a single sentence, is what the US$87 trillion (S$125.8 trillion) global economy is.

That relationship, between spending and income, consumption and production, is at the core of how a capitalist economy works. It is the basis of a perpetual motion machine. We buy the things we want and need, and in exchange give money to the people who produced those things, who in turn use that money to buy the things they want and need, and so on, forever.

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