Virtual accounting firm Miami - Is Coronavirus affecting the economy

Virtual Accounting Firm in Miami

The Coronavirus And How It’s Affecting The Economy

The coronavirus or COVID-19 is on everyone’s mind these days. The virus that first reared its head in China is now practically worldwide with new cases emerging in the U.S. every day. Aside from being a threat to the health of huge population across Asia, Europe and North America, it’s now also an economic threat.

The Impact on Stock Market

So how the coronavirus virus affect the economy? The virtual accounting firm of Miami Beach has learned about the huge plunges that the stock market’s been having. Investors are worried about supply shock and by mid-February the Dow fell 800 250 points, the S&P fell 1.7% and Nasdaq lost 1.9%.

The U.S. Government debt prices rose, and the yield on the 10-year Treasury note fell 0.71%. Gold prices went up and the price of oil dropped 3.8%. Even the Fed’s emergency 0.5% point cut in interest rates didn’t do much. According to CBS News, the 500 stocks in the S &P 500 lost a total market value of almost $3.5 trillion since its peak in February.

The Effects On Airlines

Airlines can lose about $113 billion in revenue due to the coronavirus. At least, that’s according to an article on Investopedia. As corporations decrease business trips, worldwide events and festivals such as the Ultra Music Festival in Miami are being canceled or postponed, and travel advisories, people aren’t traveling as much.

Adding to the lost revenue, airlines, the virtual accounting firm of Miami Beach learned, are also waiving cancellation fees and crediting passengers. They’re also providing less flights to fill more seats and balance out the losses that are growing every day as new cases of the COVID-19 virus make the headlines news.

On March 5^th, the International Air Transport Association increased its estimate for revenue losses to $63-$113 billion from the $29.3 billion it predicted in February. The previous estimate was based on the fact that we thought the coronavirus would be confined to China, but now the U.S. and Canada are also expected to lose about $21.1 billion. Planes these days are parked, employees are either quarantined or asked to take unpaid leave. For more on how the coronavirus is affecting the economy, keep reading.

The Effects On Automotive Production

Due to globalization, China today is indispensable. So many products and luxury items are produced in China. Thanks to iPhones, car factories, the country’s demand for oil and copper, China makes up for 16% of the world GDP. The coronavirus is disrupting business for corporations everywhere and affecting supply chains.

According to CNN, car plants across China are closed preventing global automakers like Volkswagen, Toyota, Daimler, General Motors, Renault, Honda, and Hyundai from resuming operations in the world’s largest car market. According to S&P Global Ratings, the outbreak will force carmakers in China to cut production by about 15% in the first quarter.

The virtual accounting firm of Miami Beach learned that a severe pandemic could cause economic losses equal to 5% of the global GDP which is equal to about $3 trillion. The World Bank says, even a weaker flu pandemic like 2009’s H1N1virus can still eliminate 0.5% of the global GDP.

The virus wouldn’t be the drive behind the economic losses but the way we do business and the response to the outbreak is. If people are shopping, travelling, working, if business close down, factories are idle, then supply and demand of course takes a hit.

For more assistance, call the virtual accounting firm in Miami at 305.868.7620