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Impact Of Coronavirus On The Economy

This is more than just about the economy; it is about restoring balance and confidence in the world.

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‘This is much bigger than the economy. This is the new normal.’

A textbook method of learning how finance works teach us, that when supply meets demand, revenue is generated. Now, in a world where any amount of supply is too much, is a world where the economy is bound for a facelift, no one will admire. 

There are two ways of understanding the mammoth impact Covid-19 will have on the economy. One is showcasing intimidating numbers, their decline, estimated recession that will impact percentages, shares, and figures which will see a downfall. But this isn’t just about an $84 trillion dollars world economy, that is caught off guard where they’ve bitten on more they chew and now doesn’t know how to refresh. Therefore, the second way of understanding the nuances as to what we are going to see a change in, the negatives, positives, and control measures, is a more time-appropriate measure of a pandemic, that has 2020 seem like a prolonged nightmare we’re all in. 

We’re all in this together – A financial expert recently said something that stuck very true ‘the world is at a level playing ground.’ Regardless of economic status, everyone will think twice before either buying or looking to sell a product/service. All businesses are bound to see dark days, as their presence broadly meant advertising on billboards and newspapers – but no one is out there to see them and a decrease in newspaper subscriptions as they’re seen as carriers, working capital issues – products shelved for longer than projected hence choking cash flows, reduced consumption pattern – intake momentum reduces as everyone goes into ‘conservation mode’, and want vs need analysis – where brand loyalty will be at an all-time low, as consumers opt for products that can act as a support function through these times (if you’re not a sanitizer, toilet roll, basic food raw material, medicines, then your time will have to wait). These are merely the current problems. An equal impact will be seen in creating recall to kickstart buying behaviour. During a lull period where consumers reduce buying, the reason is almost always linked to the lack of disposable income. Therefore, businesses will have to wait for their consumers to earn back enough to account as disposable for them to start spending. It is a catch-22 situation where supply will need to wait for demand to be confident in order to purchase, and this will take much over a quarter after businesses can open up as per usual. 

The silver lining – Online consumption through OTT mediums, social media, fitness apps, podcasts, and e-books will act as saviours to cope with the social distancing and lockdowns that are coming into effect. New-age ventures reshaping our lives will erupt. The same way the payment landscape of India was reshaped during demonetization, we’re bound to see ventures offering much larger life-altering solutions come to life.  

After every slowdown, rapidness is inevitable. This is the time when buying stocks in industries that seem to be going down is most ripe. Restaurants, airlines, delivery companies, these are convenience and necessity driven businesses. The same reason they’ve seen a decline is why they will see a rise in the next two quarters. When this situation subsides, their need will increase in multi-folds as people will work harder, faster and smarter, in order to make up for the losses they will incur during this period. 

What to do –

This is a time when businesses need to stand together for their employees and assist them to stay safe and financially sound. Competitors can look to collaborate in order to serve customers now so more than ever when a customer is afraid of being a customer due to economic constraints. Most importantly, the government needs to stand up to support the private sector in order to restore a balance before the economy collapses further by proposing leniency in taxation and staggered and subsidized processing of payments due for two-three quarters in order to ensure businesses have enough time to work hours and make up for the lost business, without making any unrealistic promises. 

This is more than just about the economy; it is about restoring balance and confidence in the world.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Sanil Sachar

The author is the cofounder of India’s leading incubator, Huddle, which is supporting and growing sector agnostic startups around the country. An avid sportsperson, who has played club football in England during his teenage years, he is one of the co-owners of global sports brand, Trusox. Sanil is an angel investor with a vast portfolio of growing ventures that are focusing on emerging trends and needs. Alongside his drive to grow the sporting and startup ecosystem in India, Sachar is a national best-selling author with internationally acclaimed work across all forms of literature.

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