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Impact of COVID-19 On Business in Developing Economies

COVID-19 has stung the world like a bee. It has resulted in the entire world coming to a halt. From people wearing masks, maintaining distance to countries enforcing complete lockdowns, everyone and everything has suffered, at an unprecedented scale. It was unexpected, how it affected everything, but the world and people are beginning to cope with the pandemic and are in the phase of damage control and recovery. There is a lot of debate regarding whether the pandemic even exists and whether it was self-planted, but either way, it has been very damaging for almost all the businesses around the world. We will take a look at the impact of COVID-19 on some industries.

Impact of COVID-19:

The impact of COVID-19 has had far-reaching implications on economies all around the world. The developing countries are the ones that have been hit the hardest, though. The pandemic has managed to bring even the world’s topmost economies to their knees. The oil market plunged to below zero for the first time, due to the impact of COVID-19. It was because due to record low demand, the storage cost of oil, especially in the US was remarkably higher than the cost of purchasing it. This meant that the WTI traded in negative territory for the first time.

Impact of COVID-19
The impact of COVID-19 has had far-reaching implications on economies all around the world.

Similarly, 3.3 million Americans had applied for unemployment in just April and more than 6.6 million people were already searching for newer jobs. The global economy also took a hit; it was expected that the major economies of the world will lose at least 2.4% of their GDP over 2020. Most of these estimates have come true as the reports from the earliest quarters do not look promising. The global GDP was estimated to be around $86.6 trillion in 2019, and only a 0.4% drop would mean that the drop in economic growth is as big as $3.5 trillion.

Impact of COVID-19 on Tourism:

The developing countries already face many issues and the pandemic ensured that their misery got a lot worse. Businesses that were dependent on tourism took the biggest blow as countries went on lockdowns all around the world, suspending flights into and out of their own countries. This meant that the summers of 2020 meant that people could not choose to escape like they normally tend to in the summers. Maldives, Sri Lanka, Malaysia, Thailand, etc, to name a few which rely heavily on tourism for support, were dealt a huge blow. Australia’s tourism bodies estimated a loss of A$4.5 million to the economy. Similarly, the arrivals into Hawaii, USA were down 99.5%. Even the places that remained open for tourism saw far less arrivals given the following of SOPs which included a 14-day quarantine period.

Impact of COVID-19 on Tourism
Impact of COVID-19 on Tourism

Impact of COVID-19 on Hospitality:

Hospitality and tourism go hand in hand. However, hospitality took the biggest blow of all. It struggles more because it depends majorly on tourism. Only from the perspective of the US that does not even rely on tourism, almost 2 million US hotel employees lost their jobs. Meanwhile, a study showed that dozens of hotels closed worldwide in tourism-reliant countries. Pakistan’s tourism industry does not compete with the likes of Malaysia, Maldives, Thailand, and even it struggled to cope with the decreasing demand and increasing costs. Record cancellations were observed and the hospitality industry was not the one to be in.

Impact of COVID-19 on Hospitality
Impact of COVID-19 on Hospitality

This was also synonymous with the airline industry. Many airlines all around the world were forced to close their businesses indefinitely. The US saw American Eagle, Miami Air, etc closing down. Virgin Australia was closed down along with RavnAir, as well. Several airline industries in the developing countries shut down too and it is increasingly likely that they will not open their doors again for business.

Not All Has Been Bad:

Impact of COVID-19 on Technology:

Businesses that relied on brick and mortar stores suffered most dearly. This resulted in the majority of businesses in developing countries to struggle, greatly. This was a common theme, as revenues plunged and many businesses closed down, as well. It perhaps showed the importance of switching over to e-technology to do business. Going digital has been seen as the key, and many smaller businesses switched to this technique. Many more will follow and it is important because that is probably the mode of business going forward. All the digital businesses, namely Amazon, continued to make a profit even in these times.

Impact of COVID-19 on Technology
Impact of COVID-19 on Technology.

Educational institutes chose distance learning as their mode of teaching. Working from home is a common practice and firms are saving millions with this distant working approach, studies have shown an increase in productivity, as well. Grocery stores created websites and apps for their customers to help with delivery. COVID-19 has pushed countries to use technology to its full potential. It can be said that the pandemic has resulted in an acceleration in the world’s race to go “e”. Technology, and, especially, the Internet has once again shown its importance and showcases that it could be the way we do business.

Impact of COVID-19 on Delivery Businesses:

The biggest winners along with the tech sector have been the delivery businesses. They have been majorly responsible in Amazon pocketing profits of almost $13 billion even during the pandemic days. This shows that not everything has been bad due to the pandemic. Food delivery has become a regular thing for people after restaurants were shut down. For developing countries, this has been a welcome change. UberEats and FoodPanda have managed to make big profits during the pandemic. Several small start-ups have begun which operate online and have delivery services.

Similarly, the takeaway market is also enjoying great times. Most of the restaurants that were initially forced to shut have opened their businesses with low costs given the fact that eating out is still not considered normal. This allows them to operate with lower costs and higher profits. They can also choose to shift to lower rental areas because they only need a small space to operate from.

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Sonal

Makes Noise is managed by Sonal, a professional blogger, trend-follower, and technology guru. Sonal has a bachelor’s degree in engineering technology and digs all things computer and technology-related, but doesn’t stop there. She also follows all the latest trends and loves sharing her knowledge and expertise with you.

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