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Coronavirus (COVID-19)

The Global Economic Impact of COVID-19

The Coronavirus (COVID-19) pandemic is first and foremost a human tragedy affecting the lives of hundreds of thousands of people. With travel bans and social distancing regulations impacting the normal operations of businesses worldwide, the pandemic has also begun to impact the global economy. As government response to the pandemic shifts daily and parts of the economy are shut down, the economic impact is expected to shift in the days and weeks to come.  

The Young Presidents’ Organization (YPO) conducted a survey on the global business impact of COVID-19. We summarize the findings below:  

 

Revenue Impact 

Businesses globally should prepare for an impact to their revenue directly tied to the impact of COVID-19 in Q1 and Q2. Already, 82% of business leaders reported expecting declines in revenues over the next six months; however, more than half expect no negative impact to revenues due to COVID-19 one year from now.  

This impact will vary by industry, especially as government regulations shut down many restaurants, bars, retail locations and public events to avoid human contact as much as possible. Hospitality/travel, education and media/entertainment industries were the most likely to report an impact on revenues. 10% of sector-specific retail/wholesale and production firms (agriculture, factories, mines and utilities) reported they are seeing a positive impact to their revenues. 

 

Hiring: 

While the U.S. unemployment rate was at a 50-year low, that is expected to change substantially in the coming weeks. Layoffs and major hiring freezes due to the canceling of major events and temporary closing of businesses have sent ripples through both U.S. and global hiring trends. While some industries do predict a long-term impact, 70% currently expect their number of employees to remain the same by this time next year.  

In an effort to minimize layoffs that hypothetically could put as much as 20% of Americans out of work, the U.S. government is taking measures to support businesses. Treasury Secretary Steven Mnuchin stated the government will be backing certain industries financially and providing business loans, as well as several other measures currently up for debate in congress. The U.S. is also protecting individuals financially by proposing cash assistance, sick leave, unemployment benefits and waiving interest on student loans.  

 

Operations: 

Across the globe, as much as 95% of companies reported taking action in response to COVID-19. These operational changes range in impact and include, most notably, communicating more regularly with employees (68%), adopting new health and safety procedures (67%), cancelling major events (64%) and halting business travel (53%). 

Since this survey has been conducted, additional restrictions on the state or city level have closed many retail locations, restaurants, bars and gyms, as well. The CDC recommends canceling all non-essential travel, large conferences or events, mandating new sick leave policies and moving partial or entire offices remote.  

 

Advice:  

When asked for their advice, chief executives said to stay calm, focus on facts, continue to communicate regularly with employees, anticipate and make plans for both the short and long term, and stabilize supply chains. To view other business recommendations for creating a pandemic preparedness plan, click here. 

 

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