Insights

Why the Coronavirus has in fact Shutdown World Economy

The world economy runs on ecosystems of interlinked businesses. Manufacturers send their goods to distribution companies, the distributors deliver them to wholesalers, wholesalers sell to retailers and retailers market products to consumers. When part of the ecosystem experiences difficulties it has a ripple effect on the entire economic chain. Here's a breakdown of how the Coronavirus is impacting the world economy.

Understanding the effect of pandemic response

The pandemic response is different than, say, recovery after a natural disaster. When an earthquake or a typhoon happens, there is certainly a disruption to the local economies. However, the global economy responds rather quickly. Supply chains shift and prices adjust until things return to normal. However, with Coronavirus the effects are more widespread. The response is not isolated to one area or industry.

Think of the world economy like it's a phone, for example. Inside your phone, there are several ecosystems. You rely on certain features to make calls and send texts. The applications you use for social media are another ecosystem. If one ecosystem is disabled, there is still utility in the phone. If your phone's microphone isn't working, you can't make calls. You may be able to hear people, but they can't hear you. You can still send an SMS, post on social media, or use a map application to get places. If you have no internet, you can still make calls and send texts but there's no access to WhatsApp, Instagram, or email.

When the Phone Has No Batteries

The Coronavirus Pandemic is like taking the battery out of your phone. It shuts down all ecosystems to stop the spread of the virus in hopes it will save lives. Countries around the world implemented quarantines to avoid the potential for exposure. They're discouraging people from gathering and going outside. That means their economies are completely shut down.