Claiming more than just lives, the coronavirus outbreak has seen thousands of businesses collapse and international trade come to a grinding halt as the global economy crumbles under the weight of the virus. COVID-19, which originated in China, has caused a worldwide financial crisis with disruptions to global supply chains and global trade. Travel restrictions have also been implemented worldwide in an attempt to slow the spread of the virus. The virus itself and the various government measures implemented to deal with it have had major flow on effects impacting business and trade globally.
Unfortunately, experts are predicting that the worst is yet to come. With the foreseeable future looking extremely dire, global businesses are preparing themselves for one of the worst financial situations the world has seen in decades.
Let’s take a dive into exactly how the coronavirus is affecting business and trade:
Stock Markets Plummet
Since the outbreak of coronavirus in December 2019, global shares have taken a huge hit with many reaching their lowest point in decades. Dow Jones Industrial Average is among many companies which have seen a rapid decline in shares since the outbreak, experiencing their largest one-day-decline since 1987. Unfortunately, this pattern of decline does not appear to be ending any time soon and it seems almost every industry is suffering.
Central banks globally have responded to this decline and have begun offering reduced interest rates to make it cheaper for businesses and individuals to borrow money and continue to stimulate the economy. This action aims to encourage economic activity to increase the GDP growth rate and reduce the financial impacts of the virus.
Global Travel Restrictions
In an attempt to slow and stop the spread of the coronavirus, many countries have temporarily shut their borders and implemented travel bans including the limitation of certain imports and exports. These bans alone have severely impacted business and trade for over 100 countries worldwide.
China is the world’s largest exporter of goods and makes up a third of the manufacturing sector globally. They have been hit especially hard due to this with their import and export figures down by 17.2% this January and February alone.
Global travel industries and tourism are practically non-existent at this point due to the travel restrictions currently in place. Flights frequencies have also been cut due to the virus as a result of lack of demand and global travel restrictions.
While these travel restrictions have resulted in the collapse of many businesses, it is important to acknowledge the positive impacts it has had on the environment. Air pollution across Asia and Europe has significantly decreased following the strict travel bans in place after the outbreak of the virus.
Government Stimulus Packages
There is no denying, the economic impact caused by the outbreak of the coronavirus is enormous. The Australian government alone has allocated a whopping $500 billion to stimulus packages designed to protect and help Australian businesses and individuals cope with the devastating financial impacts of the virus. In addition to the stimulus packages created, the Australian government has also introduced a range of temporary tax cuts and increased thresholds. These additional measures have been put in place to temporarily stall and slow the national economic decline.
The virus has also caused global lockdowns in an attempt to protect public health. In Australia, the lockdowns have seen the temporary forced closure of gyms, pubs, clubs, places of worship and other non-essential services. While these measures appear to be working to flatten the curve of the virus, it has meant many businesses have had no choice but to let go of employees and close up shop. Many businesses that have been able to survive thus far are operating on a skeleton team, reducing costs as much as possible to keep their business afloat.
Unemployment Rates Skyrocket
The downfall of businesses globally have resulted in millions of individuals being let go or forced to take unpaid leave. Australian Centrelink has been overloaded with individuals seeking financial assistance after being left without reliable income. Websites crashed, phone lines jammed and many hour-long queues formed outside Centrelink centres nationwide as Australians tried to receive financial aid.
The United States has seen record high numbers of jobless claims following the outbreak of the virus. Over 6.6 million people filed for unemployment benefits in the week ending on 28 March alone. This number is nearly double the figure from the prior week.
How To Protect Your Business Against The Coronavirus
While no one could have predicted the outbreak and devastating impacts of the coronavirus, it is possible to protect your business from the unknown. Trade credit insurance protects your business and accounts receivable by reducing your credit risk. Niche Trade Credit allows you to safeguard your cash flow even if a client fails to pay on the specified terms.
Credit insurance is extremely valuable when trading goods and services to international clients who may be experiencing different political events, insolvency and other serious issues. This insurance protects your business from the variables that may lead to a client being unable to pay.
The impact of the virus has been a wakeup call to many businesses highlighting that everything can change within a short span of time. It has never been more important to ensure your business and it’s cash flow are protected.
Niche Trade Credit also offers export and political risk insurance to protect your business from various international trading risks. This insurance is critical for any business that exports products or services internationally. Different countries are subject to different types of risks including war, government interference and restrictions on conversions and local currency earnings. The benefits of export and political risk insurance include a guarantee that your cash flow will not be interrupted by political events and the peace of mind knowing your business is able to expand into still-developing nations without the excess financial risk.
Ensure your business is protected against the unknown and reduce your financial risk today! Contact Niche Trade Credit on 02 9416 0670 to learn how credit insurance can help protect your business.
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