Every time an adverse social, political, cultural and technological event is unleashed in the world, its consequences in the economy sectors are usually quite brutal. Today the world experiences a health reality that has unexpectedly paralyzed all activities around the world.
The confinement measures that have been taken in the different countries of the world have been affecting all sectors of the economy, the availability of jobs, and the income of temporary and informal workers.
As happened in 2009 with the influenza A (H1N1) epidemic, the the sectors of the economy that have been most affected are hospitality, leisure, commerce, transport and tourism. Export-oriented manufacturing activities are also being affected by both supply problems and a reduction in external demand.
On the other hand, a reduction in international remittances is being observed, generating a drop in income for families dependent on receiving these transactions for their livelihood. Faced with lower demand due to mobility restriction measures, the service sector will also be severely impacted.
Likewise, the loss of employment and the fall in income has negatively impacted consumption. The economic slowdown creates lower demand for raw materials, particularly oil, putting downward pressure on its prices.
To the extent that Pandemic containment and mitigation actions are effective, shocks to the global economy, while devastating, should be expected to gradually be reversed, otherwise these negative effects on the economy may have a longer duration and i more severe long-term impact.
There is a tradeoff between the severity of the containment measures and the economic cost that these measures could bring. In a scenario without measures, the economic cost would be due to loss of life and periods of illness-based absenteeism. On the other hand, when there are sanitary measures, the cost of living and periods of absenteeism decrease, but the economic cost increases.
Domestic demand is likely to contract in the second and third quarters of 2020, with a relatively rapid recovery is expected as the health contingency ends in the fourth quarter of this year and the first quarter of 2021.
The scenario today is critical for some sectors and very uncertain for the vast majority, precisely because it is unknown when and with what consequences the Pandemic will finally end.
