Cause and Effect Essay on Covid-19
Coronavirus disease 2019 (COVID-19 or coronavirus) was first detected in December 2019 by health
authorities in Wuhan City in the People’s Republic of China. Since that time, more than 118,000 cases
have been confirmed worldwide, and the virus has spread to more than 114 countries across 6 continents,
causing over 4,200 deaths to date, according to the World Health Organization (WHO). Spread of the
coronavirus is causing a global emergency. It has been characterized as an “epidemic” by the US Centers
for Disease Control and Prevention (CDC) and the WHO has just raised the status to that of a “pandemic”—
an infectious disease that is able to infect people easily and spread from “person to person in an efficient
and sustained way,” according to the CDC.
In addition to significant health concerns, the spread of the coronavirus will impact the global economy.
Just-in-time supply chains, many of which originate in China, are particularly vulnerable to disruption
caused by COVID-19. In January 2020, Chinese officials mandated factory shutdowns across most of the
country’s provinces in order to stem transmission of the coronavirus. Despite expectations of their
reopening in early February, many have remained shuttered. These factories make everything from
medicines to car parts to electronics, and their shutdown has interrupted the work routine of roughly 60
million Chinese workers, according to Dun & Bradstreet.
Many analyses compare the coronavirus with the 2002-03 SARS epidemic. But this comparison is
misleading as the relative importance of China in the worldwide economy has increased tremendously in
the past 18 years. China has more than doubled its share of trade with the rest of the world in that time,
and many more industries are now heavily dependent on its economy.
As a result, the coronavirus has caused almost every Fortune 1000 company to experience an interruption
of their routine business operations. Across nearly every industry, multinational companies are
confronting the stark reality that business will not go on as usual. Further, economists have warned that
the coronavirus outbreak could cost the global economy an estimated $1.1 trillion in lost income. Some
predict that the epidemic’s after-effects will cause the global economy to shrink this quarter—for the first
time since the end of 2008, when a shock to the financial sector caused turmoil for businesses around the
world.
Many countries plan to implement stimulus packages to mitigate coronavirus impact. On March 3, 2020,
the Federal Reserve slashed interest rates by half a percentage point; the first unscheduled, emergency
rate cut since 2008, and the largest one-time cut since then. The International Monetary Fund has
announced it will provide additional support to poorer countries by way of grants and debt relief. But such
efforts cannot save certain businesses and industries from the substantial losses that will inevitably result
from a pandemic.
Specifically, experts expect that technology companies, apparel makers and industrial-equipment
manufacturers, as well as shipping companies, hospitality chains, airlines and the luxury goods sector will
be among those hardest hits by the coronavirus. The economic slowdown could also derail US plans to
increase exports of farm produce, energy and manufactured goods to China, delaying any real recovery in
the distressed farm and rust belts and other areas of the US economy that rely on the US-China trade
relationship. Below is an overview of those industries we expect will be hardest hit by the coronavirus
outbreak. Electronics
A very large portion of the world’s electronics come from Chinese factories. A long suspension of
production will negatively impact overall supply. Many technology companies have warned that
they will not meet their quarterly estimates because of factory closures. They also anticipate
delays in the production and shipment of existing models, and introduction of next-generation
models. Other electronics producers have been forced to increase prices on products such as
refrigerators, air conditioners, microwave ovens, washing machines and televisions due to short
supplies related to the coronavirus.
Hospitality, Tourism and Cruise Ships
Many countries continue to curtail inbound tourism, especially from countries with a high number
of coronavirus cases. The European Union’s industry chief estimates €1 billion losses per month
in the tourism sector due to the virus’s impact. One of the largest losses, felt globally, stems from
a decline in visitors from China, who represent a lucrative market for tourism and a large
population of luxury goods purchasers.
Cruise operators expect a bigger hit than initially anticipated, as a result of trip cancellations in
Asia. If suspension of operations in Asia lasts through the end of April, losses will easily amount
to $385 million to $445 million.1 Operators not cancelling trips have modified itineraries in
response to the coronavirus.
Restaurant and Entertainment
Restaurants and the food industry will be greatly impacted. Several large chains have collectively
closed thousands of restaurants in China since the outbreak. Suppliers expect raw material and
protein prices to increase substantially.
Mass entertainment venues, such as concert halls and museums, will also be impacted. The
Louvre in Paris closed its doors as a coronavirus precaution. A major rugby match between Italy
and Ireland was rescheduled. A high-profile international furniture fair in Milan has been
postponed as the country has implemented severe travel restrictions in efforts to contain
coronavirus. Some even speculate the Olympics may be cancelled.
Insurance
Insurers who provide coverage for travel or business interruption can expect to be greatly
impacted by travel disruptions caused by the coronavirus. Countless cancelled flights, hotels and
events for both leisure and business travel will undoubtedly increase the claims filings and hurt
profits.
Pharmaceuticals and Healthcare
The US Food and Drug Administration (FDA) requires growers and manufacturers under its
jurisdiction to notify the agency of any expected supply disruptions. According to a statement
issued by the agency, at least one drug is in short supply because of problems related to the
coronavirus outbreak. However, the FDA refused to disclose its name, the manufacturer or where
the product or its ingredients are made, citing “confidential commercial information.”
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