The ongoing COVID-19 pandemic resulted in seismic shifts across various spheres of socio-political and economic life. People suddenly had to avoid physical proximity to one another, lock themselves at home, and take various other precautions. According to figures reported by the World Health Organization, as of 31 December 2020, there have been 81,159,096 confirmed cases of COVID-19, including 1,791,246 deaths.
Economically speaking, the effects of the pandemic have been colossal, disrupting supply and demand in unprecedented ways. Leading economists had to tone down their optimistic estimates for global economic growth significantly once the virus became a global pandemic. Once it did, global stock markets experienced dramatic falls—the Dow Jones reporting its steepest-ever single-day fall of nearly 3,000 points on 16 March 2020. With context thus established, we’ve put together this article to discuss the effects of the pandemic of businesses. Here are the facts:
Impact on Small Businesses
According to a study that surveyed over 5,800 small businesses between 28 March and 4 April 2020 in the United States, many of such businesses experience general financial fragility, and the disruptions caused by the COVID-19 pandemic only worsened the situation. The major findings of the study include:
Closures and mass layoffs began only a few weeks into the crisis. Across the study’s complete sample, 43 percent of businesses had temporarily closed, nearly all of which were due to the pandemic.
- There was a negative association between the risk of closure and the expected length of the crisis. 47 percent of businesses expected to remain open till December if the crisis remained four months long compared to 72 percent of businesses if the crisis remained one month long.
- On average, these businesses reduced active employment by 39 percent since January 2020.
- The median business with more than $10,000 in monthly expenses only had enough cash on hand to last about two weeks.
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