LAHORE: As an unprecedented economic damage from the coronavirus crisis also looms large, along with a massive loss to human lives, the $90 trillion global GDP in October 2019 is bound to be affected adversely, and if one goes by American media house Bloomberg’s estimates last month, the pandemic can cost $2.7 trillion to the world business output, which is equivalent to the entire GDP of the United Kingdom. Remember, the global GDP is broken down into three sectors for analysis: agriculture, industry, and services. In 2017, when global GDP was $80 trillion, the breakdown by sector was 65.4% services, 25.5% industry, and 3.42% agriculture. The economic fallout, according to Bloomberg, could include recessions in the United States, the Euro-area and Japan and the slowest growth on record in China etc.
While recession is imminent, who knows the world might see an era of deflation too, whereby prices of daily-use items might come down due to poor purchasing power all around the planet if the corona monster takes a few more months to vanish.
By the way, Pakistan has an annual GDP of approximately US$285 or Rs47,880, or a daily GDP of about Rs133 billion, though it is a long debate as what percentage of Pakistan’s GDP may actually be affected by these ongoing lockdowns. It will not be an easy calculation, but what we can safely assume is that our national tax revenues are bound to plummet quickly and collection targets will surely not be met if the situation persists for another fortnight. And it remains to be seen how other Pakistani industries, fully or partially closed, will react once construction industry is allowed to function. The $24.2 billion exports will certainly come down sharply and at least $33 billion stock market will remain fragile and volatile.
There is no doubt that construction industry all over the world has around three dozen more industrial sectors allied to it, and it was this particular sphere that had helped the then US president Franklin Delano Roosevelt fight the 1929-1933 Great Depression, which had also hit most nations. But, in any industry or in any office - where people work closely -the fear of corona will always be there! And then the police check-posts are hard to cross by the labour class on motorcycles and bicycles. Cops are definitely abiding by strict government orders to enforce lockdowns, but factory bosses driving expensive cars find it much easier to pierce through the cordons of policemen, who are always good at venting their anger and frustration on the common man with no access to high offices. It goes without saying that this deadly virus will have far-reaching consequences on worldwide healthcare and lifestyles of most of those breathing on this planet.
Let us have a look at some major world industries, whose massive business volumes will surely be hurt badly due to this disease, the trajectory of which still cannot be ascertained with precision.
Market estimates believe that by 2022, the financial services market is expected to reach $26.5 trillion, growing at a rate of 6% during the forecast period. Asia-Pacific is the largest financial sector globally, followed by North America, states “Investopedia,” an American website based in New York City that provides investing and finance education along with reviews, ratings and comparisons of various financial products such as brokerage accounts. The “Investopedia” writes: “Global market capitalisation in 2019 was estimated to be approximately $90 trillion. The market capitalisation of the global banking sector as of October 2019 was $7.9 trillion. In 2018, it is estimated that the total assets of the banking industry were $124 trillion”.
According to “Investopedia,” global premiums in 2018 had reached $5.2 trillion. It is expected that by 2029, Asia-Pacific will account for 42% of global premiums, with China making up 20% of that figure. As of 2018, the US makes up 28% of world premiums and China makes up 11%. The website maintains: “Though it is difficult to obtain specific figures on the size of the global financial services sector, the sector is a large part of any nation’s economy. It consists of banks, investment firms, and insurance companies, all of which play a large role in the working of an economy”.
At a time when businesses everywhere are plunging into a deep and dark alley of recession, the financial, banking and insurance sectors will also be affected, but it is way too early to assess the exact damage. According to “The Economist” magazine, coronavirus is grounding the world’s airlines. The aviation industry may not fully recover from the effects of the pandemic.
The magazine writes: “Revenues are in free fall as travel restrictions mount and as fear of infection puts people off spending hours with others in enclosed spaces. On March 5, the International Air Transport Association (IATA), a trade group, projected a possible hit to worldwide revenues of up to $113 billion this year. That is one-fifth of last year’s overall revenues and four times higher than IATA estimated in February, when coronavirus was still believed to be a Chinese problem rather than a global one.
Many airlines bosses cling to the hope that global passenger numbers will follow the same trajectory as in the wake of previous disruptions, such as the terrorist attacks of September 11, 2001 or the global financial crisis of 2007-09. After a few months of disarray, travel patterns then reverted to normal and growth resumed. That, more or less, is what has happened in China this year. Chinese carriers were hit hard at first. At the peak of the outbreak in mid-February around 70% of flights were grounded”.
As per the World Travel and Tourism Council, the global travel & tourism industry has grown from US $6.03 trillion in 2006 and reached $8.27 trillion by 2017. Many of the 1.4 billion tourists who travelled the world a couple of years ago, will not be making any travel plans within the next few months at least. The sale and purchase of real state had plummeted globally before the advent of corona crisis. Now, it is expected to nosedive further.
According to Messrs “MSCI Incorporated”, a New York-based American finance company serving as a global provider of equity, fixed income, hedge fund stock market indexes, and multi-asset portfolio analysis tools, the size of the professionally managed global real estate investment market had increased from $8.5 trillion in 2017 to $8.9 trillion in 2018. In a state of despair and despondency, it is unlikely that any public or private sector conglomerate will undertake any construction, housing or development project of similar nature.
According to Messrs “Statista”, a German online portal for statistics, which makes data collected by market and opinion research institutes and data derived from the economic sector and official statistics available in English, French, German and Spanish, the construction industry spending worldwide had amounted to $11.4 trillion in 2018.
Many sports events have been cancelled or postponed due to coronavirus, hence affecting the sports industry. The estimates on how big the sports industry is, varies by source, but it’s commonly considered to be more than $500 billion, with some estimates running up to $1.3 trillion! The sports industry in America will reach $75 billion in 2019. The Indian Premier League (cricket) has been deferred till April 15.
Pakistan could not complete the Pakistan Super League (PSL-5) cricket matches, the 2020 Tokyo Olympics will not be held this year, the Wimbledon has officially been cancelled (it marks the first time since WWII that the grand slam tournament was cancelled), the PGA Golf tour has been cancelled, and the Football Champions League, the Premier League and the Europa League have all suspended games.
According to the German website “Statista”, the global media and entertainment industry business volume today rests at $2.3 trillion and was expected to surge to $2.6 trillion by 2023 — something that seems a little impossible as of now.
According to market research by Messrs “IBIS World”, a leading business intelligence firm, the total revenues for the oil and gas drilling sector came to approximately $3.3 trillion in 2019.
The “Investopedia” writes: “Oil is one of the most important commodities in the world. When transformed into petroleum, it is a key energy source used in vehicles, planes, heating, asphalt and electricity. Outside of being a crucial energy source, petroleum is used in plastics, paints, chemicals, tape and so much more. It’s hard to imagine a world without oil”.
The coronavirus threat has chased the luxury fashion world from Milan in Italy to Singapore and from United States and Japan to Australia. Globally-acclaimed brands like Chanel, Revlon, Gucci, Giorgio Armani, Christian Dior, Boss, Lavender, Ralph Lauren, Versace, Burberry, Prada and Hermes etc are all suffering.
The 2020 Cannes Film Festival is postponed due to coronavirus, the Australian Fashion Week, Bridal Fashion Week in New York, the Milan Fashion Week, the Shanghai and Beijing Fashion Weeks, the Sao Paolo Fashion Week, Tokyo Fashion Week and the Barcelona Bridal Week etc have all been cancelled due to the pandemic literally eating humans in 206 countries. Similarly, the $45 billion plus global perfume market, value calculated by Messrs “Statista”, is facing an uncertain future.
It is not that people will stop eating food or refrain from buying grocery goods due to the current catastrophe, but sales will surely drop. The global food and grocery retail market size is expected to reach US $12.24 trillion by 2020, according to a new report by “Grand View Research”, a Pune (India)-based business consulting firm. The world is gloomy and scared due to corona. Nobody is expected to be viewing the fashion trends this spring or during the coming summers at least, hence hitting the high-investment international fashion industry on its head.
According to the Messrs McKinsey & Company, an American management consulting firm that also publishes the McKinsey Global Fashion Index, the international fashion industry is worth an estimated $2.4 trillion currently.
In the instantly-hit hotel industry, nobody knows as to how many daily wagers have been hit by this crisis, how many people are not getting regular salaries and how many will soon be sent on paid and unpaid annual leaves, as it is happening in case of a few Pakistani four and five-star hotel chains currently, where room occupancy rate has fallen to single-digit levels, kitchens are working a lot below their capacities and the once-humming lobbies are deserted.
So, corona has already impacted the global hotel industry, which had crossed $500 billion retail value in 2018. Total revenue of the hotel industry in the US had alone touched $200 billion in 2018.
According to an American website “MarketResearch.com”, which says it is the leading provider of global market intelligence products and services, the global gambling market is expected to reach a value of around $565.4 billion, growing at an annual rate of 5.9% through 2022. The “MarketResearch.com”, which asserts it is doing business with Messrs Amazon.com, American Express, Johnson & Johnson, Accenture, Nestle, Coca Cola, Pepsi, Pfizer, Glaxo SmithKline, Revlon, Procter & Gamble, HBO, the Harley-Davidson Motor Company and Walt Disney Company etc, has maintained that the world gambling statistics show that around 26 percent of the world population gambles. That means around 1.6 billion people worldwide gamble and 4.2 billion gamble at least once every year.
People may not look to buy or replace their electronic appliances very soon now, hence affecting the $426,238million (2020 estimates) revenue in the consumer electronics segment, German website “Statista” calculated. By 2018, the global consumer electronics manufacturing industry had crossed the $1.3 trillion volume figure, according to research firm “IBIS World”.
The $186 billion world prostitution has currently nosedived for obvious reasons. This estimate has been cited by Messrs “Havocscope”, which is currently monitoring 50 black market products and activities around the world for which an estimated financial value is available.
With regards to the global prostitution or sex industry, “Havocscope” claims it has calculated the world’s prostitution revenue by adding up the estimated market values from countries where prostitution revenue is available.
With clubs, bars and pubs closed everywhere on earth, the $1324.1 billion global alcoholic beverages market is surely suffering very badly, says “Havocscope”, which claims it is trusted by organisations such as the United Nations, World Economic Forum, and countless media publications. According to Messrs Allied Market Research, a Portland (United States)-based market research and advisory company that claims it digs out factors that help its clients understand the significance and impact of market dynamics, the increase in demand for global alcoholic beverages market was projected to reach $1,684 billion by 2025, had the corona-triggered crisis not haunted the planet.
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