As the new coronavirus — COVID-19 — continues to spread, its effects are making an impact on the global economy.
Economic Growth Is Slowing
The Organisation for Economic Cooperation and Development (OECD) predicts that COVID-19 will cause economic growth to slow. If the outbreak isn’t severe, they believe growth will slow from 2.9% to 2.4%.
However, if the coronavirus outbreak gets worse, the outlook becomes grim. Economic growth could slow all the way down to 1.5%. OECD believes this will lead to a recession if governments aren’t vigilant and quick to take action.
Coronavirus Causes Stock Market Volatility
On Monday, March 9, the stock market suffered its worse losses since 2008. In the U.S., the financial indexes ended almost 8% lower than normal. The Dow plummeted 2000 points, suffering the biggest drop in its history. Trading was halted for 15 minutes in an attempt to stop the sharp fall. Drops also took place in Asia, South America, and Europe. Oil prices plunged.
With more cases of COVID-19 popping up every day, stocks are facing unprecedented amounts of uncertainty. Vice President Pence claims that the market will bounce back because of general economic strength, but trading remains volatile.
The Hospitality Industry Takes a Hit
Many cities around the world depend on the hospitality industry. With contagion fears spreading, people are less likely to visit restaurants. They’re also ordering less food via delivery services, which harms restaurants as well as companies like DoorDash and Grubhub.
COVID-19 has hit the cruise part of the hospitality industry, particularly hard. The U.S. State Department issued a warning that travelers should avoid cruise ships until this latest coronavirus outbreak has been contained. Shares for the most well-known companies — Royal Caribbean International, Norwegian Cruise Lines, and Carnival Corp. — dropped by an unprecedented 26%.
A Drop in Travel and Tourism
COVID-19 has caused panic within the travel and tourism industries. People are canceling their flights in record numbers. It has hit smaller companies, like Easyjet, so hard that they’ve instituted a pay freeze on their employees.
With fewer people traveling, fewer people are booking hotel rooms. The Business Times estimates that the coronavirus has caused a loss of 150,000 room nights at hotels in San Francisco alone.