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Covid-19: Threats And Opportunities For Businesses

Covid-19: Threats And Opportunities For Businesses

The pandemy of Covid-19 has been life-threatening, and even worse, unfortunately the ever-booming economy has been suffering dramatically in the first glance. However, my team in Hotwifi and I as the chief operating officer are of the opinion that some advantages could be achieved.

In HotWifi, the unbelievably realistic opportunities of the panademy has been examined thoroughly. As we are past the days when the importance of doing research could be shrouded in any secrecy, my team and I provide some valuable insights in this regard.

According to the report of the Consultative Assembly, with the outbreak of the Corona virus in Iran, Iranian businesses are faced with three levels of risk.

First risk; International level: The decline in world production due to the spread of coronavirus carries significant negative risks. The Corona crisis has severely challenged the global supply chain, including China and the industrialized world, and reduced final demand for goods and services (short-term supply and demand shocks). Also, different countries are in different stages of coronary heart disease, so there is a risk of disease recurrence and the time of complete cessation of the disease in the world is unknown, and in practice this risk is the export of Iranian non-oil goods, especially to neighbouring countries and imports of materials (industry supply chain and businesses). Internal) is included.

Second risk; National/economic level risk: The decrease in exports to other countries affects the decrease in the country’s foreign exchange earnings. Reducing tax revenues from businesses also affects the government’s limited sources of revenue. On the other hand, government spending has increased due to the allocation of health, treatment and support budgets. As a result, there is a risk that the quantity and quality of government assistance to remove barriers to business will be severely affected by a severe government budget deficit. Inactivity of some industries and businesses affects the total volume of economic activities and in a way, with the decrease of sales and products, incomes will decrease, and consequently, there will be adjustment of forces and bankruptcy of enterprises, and further reduction of various types of tax revenues.

Third risk; industry and business level: Companies face many problems in the supply chain of raw materials and logistics, reduced sales and productivity (supply sector). Customer attitudes and expectations are also changing (demand side) which results in increased business risks. Online sales businesses, food and healthcare manufacturers and telecommuting companies experience lower risk, and other businesses will have moderate to high risk. Studies show that the most important sectors that have faced a decrease in demand due to the outbreak of the disease are the service sectors, and for various reasons, it is much more difficult to accurately monitor the effectiveness of service sub-sectors than product-related sub-sectors.

The country’s various experiences, especially in the face of successive crises show that one of the main goals in designing the country’s policies should be to focus on increasing resilience. To achieve the goal of resilience, the role of the innovation system as a comprehensive approach is very important to be able to use the various capacities of technology and innovation, especially new technologies to reduce problems and solve them. Business resilience is very important in this situation. Studies show that the main factors affecting the increase of resilience at the business level are: variability, caution and looking at the whole value chain and ecosystem and diversity in designing solutions and emphasizing innovation (innovative measures in the field of strategic thinking and entrepreneurial); Management of supply chain fluctuations, maintaining and increasing production capacity (innovative measures in the field of supply chain); Maintaining and strengthening human resources (innovative measures in the field of human capital); Managing expenses and debts and cash flow (innovative measures in the field of finance) and maintaining and increasing sales and related capacities (innovative measures in the field of marketing and sales).

In addition to the challenges and threats posed by Corona, there are opportunities that can be exploited with the right planning. Prerequisite for transforming the threat of coronary heart disease into an opportunity to make money for all kinds of businesses and even governments, change attitudes in thought and intellectual foundations and turn to creative and innovative thinking to use any kind of initiative and creativity in the field of work; Opportunities for the private sector (such as home business development, digital businesses and platforms, packaging of goods, development of health items, startups, artificial intelligence, health and branding in capillary distribution, etc.) as well as opportunities for Decision makers and policymakers such as the full and increasing development of e-government and facilitating the receipt of licenses and the completion and preparation of a comprehensive statistical and information system of the government in various sectors, including the completion of tax systems, comprehensive system of statistics and employee information (formal and informal), identification of Weaknesses in the infrastructure of the health sector, etc.) are more than ever.

Regarding business support proposals, financial support and facilities for granting working capital facilities, using the capacity of step securities (certificate of productive credit), reducing various costs and fees, etc., applying structural support (immediate provision of infrastructure) Hardware and software for the required access, immediate facilitation of licenses to create or develop virtual stores (online) and start up other businesses, etc., support complementary industries in the food production chain in the agricultural sector (to maintain and increase Food security), the activation of economic diplomacy during the Corona (to maintain the required export and import markets) and other issues can be on the agenda

Our group in HotWifi also has been providing further information.

The Opportunities and Threats of the World Economy According to the Economist

Economy News: The corona virus pandemic is accelerating the process of change in the global economy. Henry Kerr, economics editor at The Economist, believes this is both an opportunity and a threat.

The Economist Weekly in an article entitled “The Global Economy; Insurance and Hopes” examines the harms and benefits of the global medium- and long-term corona outbreak, especially in the global economy.

An economist wrote in this article:

The “black swans” theory says that unexpected and unpredictable events have a much greater impact than most people imagine. Scientists long before 2020 feared that a common human-animal respiratory disease would originate in Asia and spread worldwide. But one can hardly predict the consequences. The story that is told from time to time by examining most economic data is that little happened for decades, and then in 2020 the Corona pandemic destroyed everything.

Prior to 2020, the most sophisticated model proposed for an outbreak similar to the Spanish flu of 1918 could kill 71 million people worldwide and reduce GDP by 5%. The Covid-19 death toll appears to be much lower, but the damage to GDP has been greater.

IMF Forecast of Coronary Economic Damage

According to the International Monetary Fund in June, by the end of 2020 global production may be about 8% lower than it could have been without the corona outbreak. That is, instead of growing by about 3%, it should face a decrease of about 5%; The largest contraction since World War II. By comparison, the “Great Depression” of 2009 shrunk the global economy by just 0.1%.

The effects of the corona attack were seismic. In April, the employment rate of 25- to 54-year-olds in the United States fell below 70% for the first time in nearly 50 years. In the second quarter of the year, one-sixth of young people around the world lost their jobs.

The International Labor Organization says working hours have dropped by almost a quarter for other workers. In June, the World Bank predicted that low- and middle-income economies would shrink for the first time in at least 60 years this year, and with a 15 percent increase in poverty, 89 million people would move into extreme poverty. The effects of months of school closures are likely to last for decades. And the nationwide shutdown has hurt public mental health: More than 10% of Americans say they have seriously considered suicide.

When China quarantined Wuhan in January. This was something that only an authoritarian and technologically advanced government could do. For a time, British scientists ignored the quarantine agenda because they thought it was politically unbearable. However, the readiness of almost all governments to shut down their economic activities almost completely was just one of many surprises. In the rich world, the corona outbreak has led to unprecedented government intervention in the labor and capital markets. In Europe’s five largest economies, more than 40 million workers were included in government-funded investment programs. The United States raised unemployment so much that it exceeded the wages they replaced for more than two-thirds of applicants. The Federal Reserve has backed the market for US corporate debt. Germany has provided guaranteed loans to its companies worth about a quarter of GDP.

None of this is cheap. Public loans are on the rise. In June, the International Monetary Fund forecast that the ratio of gross public debt to gross domestic product in advanced economies would rise from 105 percent in 2019 to 132 percent in 2021.As can be concluded, the advantages and disadvantages of such.

Balloon Growth of Bank Balance Sheets

This increase in pressure has created a new financial activity. The central bank’s balance sheets have grown exponentially as it has created trillions of dollars to raise government debt. And for the first time, the European Union is issuing bonds jointly to pay into its Reconstruction Fund. The policies of a decade ago, after the financial crisis, were considered radical at the time, but seem insignificant compared to current policies.

Initially, the answer was temporary. “What we are trying to do is freeze the economy (Denmark can claim to have been the inspiration for other forced leave schemes),” said Peter Hammelgard, Denmark’s Minister of Employment, in March. Experience has shown that the rich economies of the world can quickly emerge from a freeze after a catastrophe. Unemployment rose from about 6% to more than 15% after Hurricane Katrina devastated New Orleans in August 2005, but fell below 6% by February 2006. And while some countries have experienced their deepest recessions, others will face the shortest. The recent decline in the US unemployment rate suggests that the worst crisis, thank God, was short-lived.

Unlike the post-hurricane situation, there is no escape from a better economic situation. Just like the situation after the 2008 financial crisis, with the difference that this recession is significant in terms of magnitude, while the financial crisis of the previous decade was significant in terms of depth of impact. This is while the corona outbreak continues and at the time of writing this article, the average weekly prevalence worldwide has reached its highest level. The United States and Australia have been exposed to the virus for two periods. France, Spain and Britain are preparing for the second wave. India is on a steep slope. And no one knows how pervasive Corona is in the poorer world. Although hopes for a vaccine in 2021 are high, confidence in its safety and effectiveness is not proven. Economies can still try to survive for years to come under restrictions such as social distancing.

Accelerating Long-Term Change in the Post-Pandemic

In fact, the fact that many of the changes resulting from the pandemic will be permanent has become clearer. This special report argues that the pandemic strengthens the forces that have already played a role in the global economy and accelerates changes in trade, technology, financial and economic policies.

Prior to the coronation, the world faced three of the greatest economic shocks of the 21st century: China’s integration into the world trade system, the 2008 financial crisis, and the rise of the digital economy. As Chinese workers moved out of rural poverty to factories, cheap goods flowed west and financial capital flowed east, helping to create low inflation, low interest rates, and the loss of productive jobs in the rich world.

The financial crisis caused demand to fall, so much so that even with the cessation of globalization, interest rates fell further. The advent of technology has reduced competition, protected corporate profits, and reduced workers’ share of national income. Superstar companies, on the other hand, reap the rewards of network effects and natural patents.

Changing Consumer Desire

The outbreak of the Covid-19 virus is the fourth major shock. The drop in demand in the current crisis is the largest since the 2008 financial crisis. Savings may increase for years. Low and even negative interest rates are likely to last. This boosts asset prices, even if economies are weak. Companies are more aware of the dangers of supply chains that are both fragmented and fragile; Corona creates a greater tendency to bring them closer to home and increases the diversity of suppliers. And a pandemic is accelerating the process of digitalization. Consumers have shifted from physical retail to e-commerce, and they have become accustomed to receiving some health and education services online.

Coronation Opportunity of Technology Giants

The stock prices of technology giants have risen sharply. Even after falling in September, the + fang technology stock index on the New York Mercantile Exchange has returned around 60% since last year. Companies are adapting to telecommuting with astonishing speed and increasing investment in telecommuting facilitation technologies

Playground Changes in the Sino-US Trade War

In addition to economics, this pandemic will be a turning point in politics, geopolitics as well as economics. From 2020, the world will enter a period of close competition between the great powers. The corona outbreak, coupled with a Sino-US trade showdown, has exacerbated tensions between the two sides and even exceeded the predictions of some extremist observers a few years ago. Trade disputes, with a strange focus on trade deficits and soy purchases, are now part of a wider battle. The United States has lobbied the world to reject Chinese 5G technology, increased serious oversight of foreign investors, imposed sanctions to limit China’s access to its semiconductor technology, and pushed TikTok, China’s most successful export of China-based technology, to its product. To sell. Chinese investment in the United States has fallen. Both countries are diversifying far apart in trade. The two economies are too cohesive to be completely separated from each other, but they now combine their broad economic relations with mutual suspicion.

For domestic politics in a rich world, a pandemic represents a challenge to the status quo. Unlike the financial crisis, Wall Street is not to blame this time. But the combination of a weak economy and high asset prices due to low interest rates can provoke public outrage, especially if combined with concentrated unemployment among service workers. Low interest rates make significant long-term deficit costs possible.

Fighting the Global Economic Downturn

How we deal with the recession will change, in part because of near-zero interest rates from a neutral monetary policy, and in part because of this year’s experience in transferring cash to households on a large scale. To facilitate the rewriting of the social contract, both the enthusiasm and the necessary conditions will provide ways that may give many hope for the pursuit of globalization and the financial crisis. The fundamental question will be whether today’s policies work properly. Or does dissatisfaction condemn change to another period of populist backwardness?

What changes are needed depends on understanding how widespread the structural changes in the economy brought about by the pandemonium. The story begins with business and culminates with it.

Although a wide range of disadvantages could be mentioned by experts, in my professional view as the head of the office, diverse arrays of substantial benefits could be highlighted. As the pandemy’s effects can be long-lasting, we are provided with golden opportunities to compensate our losses and even boost our businesses according to the current situation.

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