You can see the corona crisis as a marathon, but one where we are yet only 10 kilometers away. The marathon restarts after corona and some entrepreneurs will be able to take a new start well prepared, the rest will remain to stay far behind. Governments measures have given economies all over the world an exceptionally hard blow. In any case, companies and the economy will continue to change since Corona measures hit the market.
While all sectors are negatively impacted on average, the decline in sales or cessation of sales is endangered by a lack of e-commerce, businesses, and the self-employed, especially the smallest structures that do not have sufficient cash flow to sustain such a persistent to cope with a crisis.
“As it stands, no country escapes the recession, this will be the deepest dive for the global economy in a hundred years,”
“It all depends on how long the corona measures last, but if it continues, the financial world will be permanently changing and we are on our way to the new normal ‘ Not a rosy message. Yet many entrepreneurs still have a hopeful scenario of a painful, but short crisis: the so-called temporary ‘deep freeze’. The idea is that when this is all over, people will go back to work and to the shopping street to spend a lot of money. Packed planes fly around the world to take travelers to faraway holiday destinations. Factories are picking up again, deferred orders are being picked up again. Everything is back to the way it was. But economists fear it won’t be that easy. There is a big chance of high unemployment, which entails large social costs. The same goes for a wave of bankruptcies that will weaken the industry and hold back investment and innovation. In addition, there is a chance that many households will keep their hand on the cut due to uncertainty about the economy, but also about a possible return of measures imposed by the government. Consumers may remain cautious and continue to engage in social distancing once measures have been taken. “That feeling doesn’t just go away,”
“People have to deal with severe shocks. The recovery will be slow and some behavioral patterns will change for a long time and perhaps forever. Once again we have to surrender a part of our privacy and freedom for ‘our’ government measures. ”
This crisis is unique in many ways. It is primarily a medical crisis, but also one that ensures that people are actually forced by the government to stop spending money. Moreover, it affects everyone, both labor (people lose their jobs) and capital (investments evaporate).
“Actually, we are now seeing a decline in consumer spending around the world, on top of the impact you would expect because of the restrictive measures, and that is incredibly worrying.”
For the time being, the strongest countries are protected by their governments and central banks pumping billions of euros and dollars into the economies to keep citizens and businesses afloat. But that only works in the short term because it is only camouflage of the symptoms.
“Some would like to think that this is a temporary crisis. As if a pause was pressed, and soon all machines would “just” get going again. “But according to economists, this only applies in a normal situation, not with measures such as those taken by governments today. “Normally, during a shock, a government encourages its citizens to go out again to start spending their money. However, in this crisis, governments encourage their citizens to stay indoors as much as possible. The longer this takes, the greater the damage will be on production capacity. “