The Corona epidemic has turned into a tragedy around the world. With over a 100,000 cases reported and around 3000 people dead, the impact of this only seems to be getting more and more widespread.
Even though the death count isn’t as high as past epidemics or pandemics such as Spanish Flu or even HIV/AIDS at it’s worst, there is another statistic that businesses need to look out for. The spread rate.
The Covid-19 virus is spreading faster than any other, affecting more than 40,000 people in the first 45 days (while SARS, the swine flu, Ebola and MERS each affected less than 3000 people in the first 45 days!)
This needs to be something that businesses should be concerned about because with a high rate of spread comes panic and mass hysteria and unexpected behavior from consumers.
In the Middle East, the epidemic originated from Iran and has now spread around incredibly quickly, with nearly every country in the region confirming cases of the new virus and the numbers increasing by the day.
With this epidemic spreading globally at an alarming rate, the measures to curb it and the rising panic it’s caused also has a significant impact on businesses around the world and the global economy as a whole.
Considering the speed and magnitude of the spread of the virus, experts consider the economic impact worldwide, and particularly in the oil-exporting GCC states, to be much bigger than originally anticipated
The Impact of China
Given that Coronavirus originated and had the biggest effect in China, it’s not a surprise that the Chinese economy has been affected by it. However, considering how intertwined the Chinese economy is with the rest of the world, this doesn’t just affect their economy. It could mean a global slowdown.
Overall, China’s GDP growth may slow by 0.5 percentage points this year, taking at least 0.1 percentage point off global GDP growth.
The worst-case scenario would be if Coronavirus plunges the world into an economic recession, which is a real possibility considering how quickly the virus is spreading. But it’s still not a foregone conclusion.
Currently, in retail, the businesses suffering in the Middle East are those with suppliers from China which is a number that’s at an all-time high considering the growth of drop-shipping in the region.
Issues related to suppliers in China and a decline in demand for products coming from China could cause cash flow strains, particularly in small and medium businesses.
Impact on the Tech Industry
This kind of relates back to the first point, but the spread of the virus in China has had a huge impact on the tech sector with corporate offices, manufacturing factories and retail stores of major tech companies shutting down temporarily across China.
As almost everything is made in China or at least use parts from Chinese vendors, experts are also warning customers to expect shortages for various smartphones, VR headsets, and other tech accessories which we can already start to see from the major tech names.
Apple has already warned its investors that the supply of their iPhones will be hampered by the spread of the Coronavirus since they rely heavily on their factories in Shenzhen and on the Chinese market since they are an enormous segment of their customer base.
Facebook has also stopped taking new orders for it’s latest Oculus Quest VR headset because they expect an impact on the production of the handsets due to the breakout of Corona.
Asus has warned customers that their ROG phone II will not be available until further notice due to the virus.
Even after the spread of the virus dies down, the impacts of this may last a while since it may cause many big names to diversify their supply chains and stop relying as much on their factories in China, allowing other countries to take up the space.
Travel industry slowdown
How many of you have canceled your flights or holidays in the last couple of weeks?
Probably most of you.
With the fear of how easily the virus can spend, everyone has been recommended to stay away from crowded places such as airports and avoid travel as much as possible. Moreover, travel restrictions worldwide in many countries are also not helping.
The travel industry is the most impacted by this virus and the effects of it could definitely reflect on the entire economy.
Currently, global airlines stand to lose $113 billion in sales if the coronavirus continues to spread according to the International Air Transport Association.
If the virus is contained quickly then this impact could be limited to $63 billion and economies around the world could recover quickly.
In countries like Dubai within the GCC where tourism is one of the biggest pillars of their economy, they could also be affected by the limitations on travel. The data suggest that 1.4 million Chinese tourists visited GCC in 2018 and is projected to grow to 2.2 million by 2023 so the impact of the virus could see lower tourism arrivals across the GCC, especially UAE.
Growth of Online Retail
The adoption of online shopping among Chinese consumers has often been said to be because of the SARS outbreak of 2003, accelerating Alibaba’s rise. In the same way, the outbreak of Corona has also resulted in a surge in online shopping.
Being warned to stay away from crowds, people are now resorting to shopping online instead of shopping in malls and supermarkets. In particular, grocery stores with online shopping such as Sultan Centre and Lulu Hypermarket are seeing a surge in users choosing to shop online rather than in-store.
It’s not just the grocery sector that has been impacted by this though. Across all sectors, people are preferring to shop online rather than go in-store. There has never been a better time to ensure that you have an online presence, either as a website or even by giving your customers the ability to shop through your Instagram account.
I’ve written earlier about how easy it is to set up a website these days because of e-commerce platforms and website builders. It’s just as easy, if not easier, to set up online payments on your website with Tap payments (less than 24 hours after submitting your documents is the promise!). So realistically, you could have an online shop up and running in a couple of days or at the very least have a method for online payment available with our goCollect app. If you start now.
…and you really should start now, if you haven’t already. Amazon, Walmart, and Instacart are already facing delays in some areas of the United States because of the surge in online shopping seen. These will be reflected in the GCC as well as the spread of the virus increases across the region.
What do you think could be other ways that the region could be impacted by the spread of the Coronavirus? Do you think that the spread of the virus is going to be curbed soon? We’d love to hear your thoughts!