Impact of The Coronavirus on Economy

Author -Jayveer

Coronavirus is a pandemic that began in China’s Wuhan province and spread rapidly. It is also known as COVID-19 i.e. Coronavirus disease 2019. Coronavirus is going global and is recognized as a pandemic by the World Health Organization (WHO) on 11 March 2020. As of 26 March, more than 468,000 cases of COVID-19 have been reported in more than 190 countries and territories, resulting in more than 21,200 deaths and while more than 114,000 patients have made a recovery.

The virus is typically spread through close contact and via respiratory droplets produced when people cough or sneeze. Since these numbers are increasing exponentially day by day, WHO has advised people to stay indoors and practice social distancing. This has even caused lockdown in many countries which are impacting their overall economy and business. If this has not stopped it could bring the world economy to a standstill.

Due to major lockdown in many countries, new business is not currently happening and many countries are working online in the ‘Business As Usual (BAU)’ mode. The impact is widespread in all the sectors globally which is affecting the world’s economy. It’s not an exaggeration to say that the COVID-19 pandemic has thrown the world into a tailspin. Its impact can be seen in detail in various sectors as follows:

Airline Industry:
Coronavirus has spread now in more than 190 countries, and most countries have travel advisories or outright bans in place to restrict the spread of the virus. Due to major lockdown in most countries, no business or personal travel is happening at the moment. This has impacted the current and all future bookings and is seriously disrupting the airline industry.

The combination of trip cancellations and country-specific restrictions on international flights has already cost the industry $880 billion. Many airlines are cutting capacity and taking emergency measures to reduce costs. Airline share prices have fallen nearly 25% since the outbreak began and it will continue to fall more if this spread has not stopped. Naturally, the economic impact on airlines has been immense. Nearly 40% of flights impacted by the European travel bans are U.S. based, such as Delta and United Airlines, with billions in lost revenue already estimated for this year.

As it is, aviation is a low margin business. While the reduction in fuel prices had come as a respite for airlines, the current lockdown has come as an existential crisis with many airlines facing the threat of bankruptcy in the coming months.

Tourism & Hospitality Industry:
The tourism sector is entering a great crisis due to the Corona Virus-induced lockdown. Not only is all travel banned, any public space which has the potential to attract a crowd has also been shut down which means any tourist attraction is not open to the public. The duration and scope of this ban and lockdown are still unknown and the impact of the Corona Virus on companies is already global with cancellations of trips, public events, temporary employment adjustments, and falls in income.

The global tourism market averages revenues of $1.7 trillion annually and due to the outbreak, economic losses have already reached $600 million and it is predicted that the loss will eventually reach at least $1 trillion by the end of the year.

Across the world, many consumers are playing it safe and staying home, while there are still others that are continuing normal day-to-day operations. Businesses are also being prudent and have stopped all non-essential travel and activities due to the fear of community transmission. Resorts and hotels that were booked by excited vacationers and corporate conference-goers are receiving calls to postpone or cancel entirely. This is hitting their bottom line in a big way.

The Corona Virus has convulsed the world tourism industry, with large hotel chains and digital platforms such as Booking.com being forced to cancel reservations. The tourism industry faces an unprecedented confluence of threats made up of — a global health alarm; the shortage of aircraft due to the crisis of the Boeing 737 Max; the social demonization of travel; exaggerated and even false media offensives; climate catastrophes; sector taxes; bankruptcies of operators and airlines; and the political instability and economic slowdown in the large markets — which hints at least a global contraction for the tourism business in the near future.

Financial/Banking Industry:
As the fallout from the coronavirus outbreak continues, we might see the possibility of these trends developing in the global banking industry.

Falling central bank interest rates are likely to hurt savings account interest rates that some banks rely on to acquire customers and drive deposits.

Central banks across the globe have been making emergency rate cuts to cushion their economies as coronavirus threatens growth. This will encourage more loan activity from banks and discourage them from offering high-interest rates on savings accounts for the sake of profit margins. Therefore, these rate cuts are likely to put pressure on banks that wield high-yield savings accounts in order to pull in new business.

The impact of the coronavirus outbreak is impacting both financial markets and consumer behavior as never before. At least in the short term, there has been a significant flight to safer investments by consumers, which could negatively impact VC funding of existing and new ventures. This potential drying up of financing to non-traditional financial services firms could force many firms to find collaboration or investment partners from traditional banking organizations. Some early-stage fintech firms may need to shut down.

Also on the negative side, especially for fintech firms in the payments sector, is the impact of the expected drop in transactions at all levels of the economy worldwide. This means fewer fees collected by companies on the payments side of the fintech sector, impacting profitability as well as valuations for traditional payment firms as well as fintech firms such as Chime. Hardware shortages could also impact firms like Square, which rely on digital devices to support transaction processing.

The impact is not limited to just these sectors and there are plenty of other sectors that are impacted highly due to this. Many countries have closed their borders so no import and export is happening right now. This is causing huge losses to manufacturing industries because no one is currently buying any items.

Also, the stock market has responded to the COVID-19 pandemic with worrying volatility, as traders have panic-sold out of fear. As a result of the recent turmoil, the market-wide circuit-breakers that attempt to prevent panic-trading, have been triggered multiple times in March in many major exchanges around the world.

All these things are having a severe impact on the economy worldwide and the impact has spread out in all the sectors because right now no business is happening and everyone is trying to just save their business by working remotely. As per the market experts, if this situation is not tackled soon, we will be entering into the global recession soon and there will be plenty of cuts in jobs from various sectors for the entire 2020 year.

We must find out some way to fight with this pandemic and now we will focus on how data science, Artificial Intelligence, and technology can be used to fight with this pandemic:

Usage of Artificial Intelligence and data science to fight this pandemic:

There are various ways artificial intelligence, data science, and technology are being used to manage and fight COVID-19.

AI to identify, track and forecast outbreaks

The better we can track the virus, the better we can fight it. By analyzing news reports, social media platforms, and government documents, AI can learn to detect an outbreak. Tracking infectious disease risks by using AI is exactly the service Canadian startup BlueDot provides. In fact, BlueDot’s AI warned of the threat several days before the Centers for Disease Control and Prevention or the World Health Organization issued their public warnings.

AI to help diagnose the virus

Artificial intelligence company Infervision launched a coronavirus AI solution that helps front-line healthcare workers detect and monitor the disease efficiently. Imaging departments in healthcare facilities are being taxed with the increased workload created by the virus. This solution improves CT diagnosis at a vastly improved speed.

Chinese e-commerce giant Alibaba also built an AI-powered diagnosis system that they claim is 96% accurate at diagnosing the virus in a matter of seconds.

Process healthcare claims

It’s not only the clinical operations of healthcare systems that are being taxed but also the business and administrative divisions as they deal with the surge of patients. A blockchain platform offered by Ant Financial helps speed up claims processing and reduces the amount of face-to-face interaction between patients and hospital staff.

Drones deliver medical supplies

One of the safest and fastest ways to get medical supplies where they need to go during a disease outbreak is with drone delivery. TerraDrone is using its unmanned aerial vehicles to transport medical samples and quarantine material with minimal risk between Xinchang County’s disease control center and the People’s Hospital. Drones also are used to patrol public spaces, track non-compliance to quarantine mandates, and for thermal imaging.

Robots sterilize, deliver food and supplies and perform other tasks

Robots aren’t susceptible to the virus, so they are being deployed to complete many tasks such as cleaning and sterilizing and delivering food and medicine to reduce the amount of human-to-human contact. UVD robots from Blue Ocean Robotics use ultraviolet light to autonomously kill bacteria and viruses. In China, Pudu Technology deployed its robots that are typically used in the catering industry to more than 40 hospitals around the country.

Develop drugs

Google’s DeepMind division used its latest AI algorithms and its computing power to understand the proteins that might make up the virus, and published the findings to help others develop treatments. BenevolentAI uses AI systems to build drugs that can fight the world’s toughest diseases and is now helping support the efforts to treat coronavirus, the first time the company focused its product on infectious diseases. Within weeks of the outbreak, it used its predictive capabilities to propose existing drugs that might be useful.

AI to identify non-compliance or infected individuals

While certainly a controversial use of technology and AI, China’s sophisticated surveillance system used facial recognition technology and temperature detection software from SenseTime to identify people who might have a fever and be more likely to have the virus. Similar technology powers “smart helmets” used by officials in Sichuan province to identify people with fevers. The Chinese government has also developed a monitoring system called Health Code that uses big data to identify and assess the risk of each individual based on their travel history, how much time they have spent in virus hotspots, and potential exposure to people carrying the virus. Citizens are assigned a color code (red, yellow, or green), which they can access via the popular apps WeChat or Alipay to indicate if they should be quarantined or allowed in public.

Chatbots to share information

Tencent operates WeChat, and people can access free online health consultation services through it. Chatbots have also been essential communication tools for service providers in the travel and tourism industry to keep travelers updated on the latest travel procedures and disruptions.

Supercomputers working on a coronavirus vaccine

The cloud computing resources and supercomputers of several major tech companies such as Tencent, DiDi, and Huawei are being used by researchers to fast-track the development of a cure or vaccine for the virus. The speed these systems can run calculations and model solutions is much faster than standard computer processing.

In a global pandemic such as COVID-19, technology, artificial intelligence, and data science have become critical to helping societies effectively deal with the outbreak.

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