Covid-19, is this a blessing in disguise?
First of all, I’m not a writer, I’m a financial analyst. I process information, think, and then relay it the best way possible.
We all know the coronavirus pandemic is going to affect our economy, but the real question is, how and where exactly would it hurt?
Unfortunately, the victim in this story is the service industry. Here’s why…
The service industry comprises the finance, investment industry, supply chain, entertainment, media, transport, sport, and insurance. These industries hold essential parts of the global economy, for example, consumer spending accounts for 70% of US GDP.
How would this affect us as individuals?
This will be explained in two (2) possible scenarios,
First scenario identifies an economic impact that leads to a slight recession affecting only Q2 and Q3 2020, with economic recovery seen in Q4 2020. We expect to see a few layoffs and corporate bankruptcies’.
The second scenario explains a period of prolonged contraction where economic crisis spreads throughout the year resulting in a financial crisis close to or even more severe than the financial crisis of 2008-09. This will lead to a significant distress in the world financial system and fall in global GDP. There will be a lot of layoffs resulting in a steep increase in unemployment, high corporate bankruptcies, and increase in poverty level.
Is there a good side to this pandemic?
Telehealth-5Gs lightning-fast speed near-instantaneous communication empowers physicians to treat, diagnose, and operate on patients without being physically close to them. Example, Telecoms ZTE designed a 5G-powered system that enables remote consultation and diagnosis to help during Coronavirus pandemic.
Teleconferencing – every employer can now see the need for remote working using platforms like google hangouts, zoom and so on. There’s a need for 5G connection at offices and homes to provide real-time and uninterrupted communication.
Autonomous economy – autonomous economies are likely to be supported by an amalgamation of what we consider today to be disruptive platforms that, among other inputs, leverage AI. These platforms use deep and broad connectivity and continuous observation and adaptability capabilities.
The world is moving on to a seamless connectivity and autonomous economy, and the sooner we realize that the better for us all.
Example, South Shore hospital in Nigeria piloted tele-medicine for consultation in order to reduce human contact.
Bar-llan University began the use of autonomous minibuses to transport patients, medical supplies, food and clothing to isolated hospitals in Israel.
How do you prepare yourself financially?
- For investors – if you have any investment, it’s probably looking very ugly right now or you have lost it all. Don’t obsess over it. If it’s ugly, don’t panic by selling off your holdings, you are locking in the losses, which means you won’t benefit from an eventual recovery. If you have been wiped out, recall in the 2008 financial crisis, it took only a couple years for the market to recover. So get ready to jump in and recover from the new opportunities the market brings.
- Build up emergency funds – common finance sense says you should have up to 6 months’ worth of expenses in your bank account. So if you are a little short on that, now is the time to start building up one as the peak of the pandemic is not yet known.
- Rebuild your resume – with decrease in demand, businesses are not going to be able to keep their entire staff on payroll. With that in mind, now is the time to improve your resume with extra skills and qualifications that will be useful for the post pandemic economy. You can also start looking for job opportunities, start connecting with people who might be able to aid your job search.
- Reach out to lenders – most people will already have their income drop as a result of the pandemic and might be hard to feed, pay rent or mortgages. Since most people will be affected, lenders may be willing to give out aids which will help you keep your family afloat.
- Look for ways to earn extra cash – everyone has something they can do to earn extra cash during situations like this, if you don’t, this will be a perfect time to learn new skills as a lot of people will need a lot of work done virtually, with higher focus on optimal cost implication. E.g. selling items, providing services, etc. this will help you keep your cash flow in this period.
- Insurance coverage – do you currently have any insurance coverage, check to see if you are not paying too much premium considering the current economic situation, if you are, find a way to negotiate lower premium prices to control/reduce your expenses.