Lockdowns, empty flights, and sick leave could have a big impact on the global economy
Just as has happened in previous instances of international crisis, it is the airline industry that takes the first hit from the economic and social disruptions being caused by the novel coronavirus. it was shutting its operations in the wake of bankruptcy, the International Air Transport Association sounded the alarm that losses to the aviation industry could top $113 billion.
America’s United Airlines says it has seen a 100 percent decline in near-term demand to China, and a 75 percent drop in demand on the rest of its trans-Pacific routes, according to aRunning an airline is a tough business. Surges in fuel price quickly erode profit margins. Aircraft are often leased or bought on loans, which means they have to be continuously operated to pay off the charges.
“SARS experience underestimates today’s impact because China’s economic size is now much greater,” a recent IATAIt says that China’s share in the global economy has jumped to 16 percent in 2018 from four percent in 2002 while that of manufacturing increased to 39 percent against 10 percent in the same period. China, the world’s second-largest economy behind the US, was first to report the Covid-19 cases.
Check-in counters of Japanese airlines are empty at the Gimpo Airport in South Korea on March 9, 2020, after Seoul announced it will end visa-free entry for Japanese citizens. Outside of China, Covid-19 has killed dozens in Iran, raising concerns that developing countries won’t be able to contain the outbreak and its fallout. Analysts fear that the virus could result in a recession if it worsens any further, causing businesses to shut down and people to lose jobs.
The central banks can’t do much as interest rates are already low in major economies. Even before the crisis, there were concerns that low interest rates weren't helping to boost global GDP.
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