The Coronavirus and Possible Effects on the Economy

I’m sure that by now everyone has heard of the Coronavirus, also known as COVID-19. As we know, many have been infected and deaths have been caused by this virus. At the time this was written, the CDC estimates 119,176 cases globally with 4,295 deaths attributed to the virus. With cases all over the world and the intertwining of our economy with global supply chains, we could see some effects of the virus even if it isn’t on our doorstep.

Though 119,176 cases may not seem like a lot, it is in terms of the global population. There is talk among economic leaders of disruption in our global economy. Since the United States and many other countries rely heavily on production in China, companies will see large disruptions in their global supply chains. Travel experts warn of slowing travel as the virus continues to spread. Also, employers large and small are going over plans on what to do if this virus continues to grow. While it’s great that there is planning, it does bring panic to the overall population.


Chart From Abacaba Youtube Channel on COVID-19 cases worldwide


What does this mean for the near future? Potentially, we could see fewer jobs in the market – especially those in the travel sector. We are also seeing a slowing of growth with Saudi Arabia and Russia as they fight over oil production due to consumption from China slowing drastically. This will lead to low crude prices, resulting in lower gas prices for consumers. This is negative overall for the economy, though, as the oil and gas industry will be heavily affected by this. With all of this short-term uncertainty across the globe, we can expect to see a lot of fluctuations in the stock markets around the world as many countries check to see how this is going to affect the overall economy of their own countries. Also, uncertainty is driving many investors to leave the market altogether and seek safer investments like treasury notes. It is a scary time for many in the market, though there is talks of the federal reserve making purchases that might prop up the market for the short-term.

Since the last market crash, many investors have become skittish and jump out of the market at the first sight of trouble to ensure that they do not lose their savings like they did in 2008. This has made the market fluctuations much more drastic. Though, if you read my previous article about the 2008 recession, you would have found out that those who stayed in the market fared pretty well and those who bought while it was going down went on to do even better. However, I can’t blame the average investor as there has been a lot of uncertainty in the market with the trade war, the separation of Britain from the European Union, and now COVID-19.



I think that since all of these events have happened recently, we can expect some long-term effects on the overall global economy. I think we might see a potential rearrangement of supply chains with companies around the world potentially no longer relying solely on China for manufacturing. This may allow us to see a more diverse network of manufacturers to reduce the risk of disruptions in the future. I think the oil prices might have a lasting effect on small energy companies around the world being forced to consolidate into more diverse, large companies – thus reducing competition. We’ll have to wait and see where the future goes, but I don’t think that it Is all doom and gloom. With every correction, there is good that comes from it. We might see more innovation and jobs created in the US and around the world.

Bottom Line

I do think that we’ll bounce back from this and become a stronger global economy. Once the fear of Coronavirus subsides, there’s a vaccine in place and people feel safe, it will be business as usual. I do think that by that point, things will have changed. Companies will have learned from the effects of this virus on the economy and I think the energy sector will need some time to heal. Economic outlook doesn’t look great in the short-term, but I believe that in the long-term the human species will push through and continue to thrive. There will be more diversity within manufacturing. As for Coronavirus itself, I think we will get through it with a cure. Since writing this, 66,617 people have recovered, and it looks like the number of cases in China has begun to slow down – which is great news! And who knows, maybe in a month cases will have slowed down globally. We can only hope!

If you would like to learn more about investing check out The Intelligent Investor by Benjamin Graham the teacher of one of the best investors of all time Warren Buffet.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s