COVID-19 and the Business Sector

Written by Muhammad Shoaib


NYSE- New York Stock Exchange DJI- Dow Jones Industrial Average IATA- International Air Transport Association FTSE- Financial Times Stock Exchange BoE- Bank of England


The outbreak of the COVID-19 virus, better known Coronavirus, sent shockwaves across various countries with its socio-economic impacts. With its outbreak in the economic centre of Central China, Wuhan, in early December of 2019, the virus has spread to all corners of the world. The pace of this spread was largely supported and enhanced by the deep global interconnectedness and interdependence as a result of which the virus was able to spread from country to country.

Aside from the social impacts of the virus, the initial economic impact was largely felt by financial markets across the globe, namely that of the US, in which the NYSE and, in particular, Wall Street reacted very sharply as it plunged by 12%- the worst since 1987 (Rushe & Wearden, 2020). This prompted governmental intervention into economies, all across the world, to bring about some sort of stability and reduce losses in financial markets.

This report will analyse, in detail, the impact of the Coronavirus on the business sector and the ways in which efforts have been and are being made to mitigate the economic impacts.

Commodities, Global Shares and Investments

The fear of Coronavirus damaging the global economy led to a jolt within the commodity markets, resulting in a fall in the prices of oil and metal whilst gold prices rocketed as traders fight to hold on to assets. Figure 1 in the appendix shows the price of Crude oil ($ per Barrel) which shifted from $62 per Barrel to $27 per barrel (as of 23rd March) a percentage decrease of 57% in the space of three months. The sudden drop in price was caused by a price war between leading producers of oil, Saudi Arabia and Russia over Coronavirus. Whilst the OPEC policy was to restrict production, to the tune of 1.5m less barrels a day, to bring about stability in prices, non-OPEC members such as Russia rejected this notion claiming it wanted to “assess the full impact of the virus on demand” before any action is taken (Allen, 2020).

Contrary to the behaviour of the oil markets, the gold market capitalised on the spread of the Coronavirus. As shown by Figure 2 in the appendix, there was a three month change of 13% in gold prices as gold rose from £36.71 per gram in January 2020 to £42.09 per gram in March 2020. The Gold market reacted in this way as gold is traditionally seen to be a less risky asset in unstable times. Quoting Adrian Ash, a director of an online trading platform, Warwick- Ching (2020) notes that the increase in gold prices is as a result of “money managers buying gold to hedge against a downturn in the global economy”- opting to hold safer assets in these uncertain and unpredictable times. However, as of the last few days, even the ‘safer investments’ such as gold have been hit with a fear of another global recession, resulting in investors letting go of these assets.

The biggest losers of Coronavirus- to date- have been international stock markets. Figure 3 from Bloomberg shows that the FTSE, DJI and NIKKEI225 all recorded a huge fall since the outbreak of the Coronavirus. The NIKKEI225 saw a percentage decrease of 28.7%, DJI with a loss of 31.1% and FTSE losing 34.1%. The reason behind this fall is investors fearing inadequate or no economic growth as a result of the virus and that any governmental intervention will not be enough to reduce the markets sliding down further. Quoting Neil Wilson, O’Connell (2020) writes that “markets are at a breaking point” due to the volatile conditions created by the virus.

The real impact of these losses is to be felt by consumers and especially those with pensions invested in pension schemes; the value of which is affected by the performance of these stock markets. In response to these losses, central banks of many countries have reacted by cutting interest rates, with BoE cutting rates from 0.25% to 0.1% which are the lowest ever in the Bank’s 325-year history (Bank of England, 2020). The cutting of interest rates is so that borrowing is much cheaper, and this also encourages consumers to spend more which in return boosts the economy.

The Travel Industry

The travel industry has borne the brunt of the Coronavirus due to travel restrictions which has led to reduction in the number of flights and also a drastic decrease in the number of people flying. Flight operators have had to cut flights due to governments introducing entry restrictions to prevent the virus from spreading and taking off.

As it happened after the 9/11 attacks, the airline industry is once again the first to find itself on corporate front line in a global pandemic. The airline industry lost over $40bn after the 2001 attacks and it took five years for it to return to profit making (Makinen, 2002). The coronavirus makes it another challenging moment for the industry as it already facing criticism in regard to environmental concerns and now faces multibillion losses. According to the IATA, the industry is projected to lose more than $250bn in revenue for 2020, with the assumption that the coronavirus will enter recovery phase within three months (Macheras, 2020).

The response to the crises has been varied from country to country. Qantas told most of its 30,000 employees to take leave (paid or unpaid) as it cut all international flights. Chief executive Alan Joyce said demand for travel had “evaporated”. Delta Airlines in the US has parked more than 600 planes and cut corporate pay by as much as 50%. The United Nations’ Civil Aviation Organisation called on governments to ensure cargo operations continue, as they are needed to transport medicine, ventilators and other health items needed to fight the pandemic (Marris, 2020).

For any chance of recovery, the global airline industry said it will need up to $200bn in emergency support and Boeing called for $60bn in assistance for aerospace manufacturers as the international travel industry continued to bleed cash in the face of a global lockdown (Powley, 2020). These funds will largely be required to pay off creditors and suppliers. For Boeing, $60bn assistance package will be used to protect its supply chain which has over 2.5m jobs and 17,000 contractors. Losses at this rate have led to aviation giants warning that this will be of significant disruption to their cashflows and they may even run out of money by the end of the year.

Consumer Purchasing Patterns

With the outbreak of Coronavirus, it triggered a stockpile panic amongst consumers who immediately focused on stockpiling non-perishable food items. The first impact has been that grocery sales have skyrocketed, with shelf-stable grocery doing wonders for supermarkets. Purchase has grown for items including sales of canned & dry milk spiked by more than +350% , while canned & jarred fruits were up by +297%. Flour sales skyrocketed to +623% in comparison with the start of 2020 (Pruett, 2020).

Alongside groceries, by no means surprising, sales of hygienic and household cleaning supplies increased exponentially. Sales of masks and general cleaning supplies, used to reduce the chances of contracting the virus or spreading it, hit all time highs in early March with many items also going out of stock. Governments have called for calm amongst consumers with supermarkets introducing rationing measures to curb the rising demand.

In the business perspective, research conducted by IRI Worldwide (2020) says that food delivery, click-and-collect, online shopping and home delivery are all expected to increase as consumers avoid going to areas where there may be large gatherings, according to Information Resources Inc. (IRI), Chicago. The research company also hinted at businesses adapting their business models to have click-and-collect and home delivery as every retailer’s business priority.


In conclusion, it is clear that COVID-19 has played a major role in the way the business sector runs, from the stock market to consumer purchasing. It is difficult to predict when the virus will hit its curve, but one thing is certain, businesses will continue to innovate their operations to meet customer demands. Most analysts are predicting that economies will recover, but the question is when will they fully recover?


Allen, M., (2020), Why Oil Prices have dropped, Edinburgh News, Available from: coronavirus-impacting-price-petrol-2442775, Accessed on: 27/03/2020

IRI Worldwide, 2020, Coronavirus Research, Available from:, accessed on: 28/03/2020

Macheras, A., (2020), Aviation in 2020,, available from;, accessed on: 28/03/2020

Makinen, Gail (September 27, 2002). “The Economic Effects of 9/11: A Retrospective Assessment” (PDF). Congressional Research Service. pp. CRS–2.

Marris, S., (2020), Coronavirus: Future of aviation ‘cannot be guaranteed without state aid’, Sky News, Available from: cannot-be-guaranteed-without-state-aid-11960009 Accessed on: 28/03/2020

O’Connell, D., (2020) Coronavirus: FTSE 100, Dow and SP500 in worst day since 1987, available from:, Accessed on: 27/03/20 20

Powley, T., (2020), Airlines and Boeing Seek Billions to survive Coronavirus Shutdown, Financial Times, available from: 1fe6fedcca75 accessed on: 28/03/2020

Pruett, M., (2020), Coronavirus is affecting consumer behaviour, Criteo, available from: accessed on: 28/03/2020

Rushe, D. and Wearden, G., (2020), Wall Street Suffers worst Day since 1987 as recession fears grow, The Guardian, Available from: emergency-rate-cut-coronavirus-ftse-dow-iag-flutter-business-live?page=with:block- 5e6fdbe08f085c6327bc112e#block-5e6fdbe08f085c6327bc112e, accessed on: 26/03/2019

Warick-Ching, Lucy., (2020), Gold Surges on Spread of Coronavirus, Financial Times, Available from:, Accessed on: 27/03/2020



Price of Crude Oil $ per Barrel
Gold Capitalises on the Spread of COVID-19
Stock Markets take a Hit

#business #COVID19 #economy

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