The Top Five Tech companies in the world (Apple, Microsoft, Amazon, Alphabet, and Facebook) have lost a combined $1.3 Trillion in value since February 19, this year. There has been the most brutal equity collapse in the world economy since the great depression, exacerbated by a 60% slump in oil prices. In fact, JPMorgan reckons a 12% contraction in the global economy from January to March.


According to the ILO projections, 25 million jobs could be lost due to COVID-19. According to Mckinsey and Co report, the economic implications will be driven mostly by these four areas;

1. Oil Prices: Decline in oil prices to as low $25 per barrel will lead to a decline in GDP, reduced government spending and exchange rate instability.

2. Consumer demand: This will be experienced in three ways;
a. Restricted movement; there will be reduced household and business consumptions due to restricted movement and travel ban.
b. Reduced number of people traveling because of health concerns
c. Shrinking wallets; Health costs and fears, job losses will lead to reduced discretionary spending and reduced non-discretionary spending. *discretionary funds is an amount of money that is available to spend on things that are not considered necessary but that may be useful. That means you have enough money to meet your necessary needs and extra money to get things that aren’t entirely necessary.


3. Supply Chain Disruption; value chain disruption will lead to production losses due to a shortage of inputs. This means with fewer people at work, productivity will reduce.

4. Investment and Capital Inflow: Movement restrictions of people will result in delays and cancellation of foreign investments. Imagine an investor who has to visit a business he wants to invest in to do some due diligence.
Nigeria imports about 12% of its GDP, which are mostly intermediary goods (80% are heavy machinery and mineral oils). Our biggest exporter China (25% of total imports) is in recovery mode and the impact on supplies is moderate. Europe and the USA are still in economics shutdown and this will impact Nigeria sourcing.

This basically means, if you’re a worker in a manufacturing company or a trading company heavily reliant on sourcing from Europe, expect downsizing in your company.

So largely, the picture is gloomy and developing countries heavily reliant on exporting to first-world nations will be worst it. Stimulus packages by the government from third-world countries may not be sufficient or even available so economic recovery will be really slow.

So what should you do as a person to cushion yourself from this hit?

Here are Six Ways to Manage in this Crisis

1. Determine what you need, not what you want. List them. You don’t have to give people money. Only acquire what you need, study your resources and defined what you need. Anything extra is bad management.

2. Decide not to live beyond your means. Don’t waste. The temptation to consume everything you have and spend all your money is evil. This is no time to waste resources.

3. Withdraw the unnecessary. It is also time to review some people who you’ve been supporting who can really support themselves. There are people depending on you who are able to fend for themselves. Withdraw that support. Can you live without Netflix and DSTV? Maybe you should suspend those for now. Don’t worry, you will still be sane.

4. Delay major projects. This may not be the best time to invest in projects that are longer-term and will put you seriously behind financially. This is really time to survive. You can resume those projects when you’re more stable economically.
Value your possessions. Plan to keep what you have longer and delay the purchase of a new one. Ensure it is in good condition. Manage every penny. No new clothes this time, take care of the old ones you have.

5. Save. Change your lifestyle and give with discretion. Not everyone who asks you deserves to get it and that includes family. Study to find out if the reason is a legitimate need. A wealthy person doesn’t need to show it.

On savings, I believe saving is for periods like this. Not only to cushion yourself but to acquire wealth as prices of real estate, stock, and business dealings will decrease. Invest wisely.
This is the best time to make serious money.
If you’re investing in a business, here’s what you should invest in;

Essentials: No matter how bad the economy gets, people will always need food and water. You can never go wrong investing in these. However, be careful and strategic, you can invest wrongly in these and still fail. Now may not be the best tome for expensive bottle water.

Real Estate: If you have the funds, you should start checking out Real Estate, because as usual, they will be distress sales. Since most people will hold back on spending, which means fewer potential buyers, the price of properties will be highly negotiable.

Ecommerce: If you ever thought of getting into e-commerce, this is definitely your best opportunity. For example in China; Fresh food delivery businesses are making a buck as demand surged by 20% during the pandemic. Below is a graph showing the increase in online sales for personal items.

Stocks, Bonds, Mutual Funds: The current market is bearish and there isn’t a better time to buy than now. The prices of stock fluctuate with current news. Amidst the fears looming due to COVID-19, the prices of stock have dropped more than 20% in the last three months and will continue for a period. If you’re comfortable with investing in stock for the long-term, now is the time.


Yourself: Most importantly, now more than ever is the time to invest in yourself. Invest in skills that make you indispensable and skills that can be done remotely. When economic recessions hit, only the best are kept, so ensure that if you’re working in an organization, you have the skills that make you extremely relevant. If you are laid off, don’t freight, quickly pick up a new skill or improve on the one you have, and find opportunities. If you’re confident about going into business, you should but bear in mind that it will be tougher than usual. You are your best business.

Bear in mind that we’re getting the worse hit after the pandemic is over and people are not talking about it. People will loose assets and businesses and the government will become more powerful because it will have to bail out some big businesses. This means that regulations will be tighter and there will be little opposition from the private sector because most will be too vulnerable. So expect a tougher business environment. To survive, you must absorb the right information quickly, diversify your skills (you may have to get your hands dirty temporarily), don’t be proud. Be flexible and be ready to adapt quickly. Trust this, the world will be better for this .

My name is Klein Udumaga. If this helped, please like, share and drop a comment so that more people can see this article. Thank you!

This was originally posted on my medium page. Please follow to read more stories like this.


https://medium.com/@kleinuduh/how-the-economy-will-be-affected-by-the-covid-19-pandemic-and-how-you-should-brace-up-da46e2bd5a

...Okay.. But shey i go still dey smoke igbo ni ?? ...As jobs are shutting down other opportunities are opening up..like when a new party takes over a government

Of course but the new jobs will require new skills and the competition will be higher for the few available.

kalufelix:
...Okay.. But shey i go still dey smoke igbo ni ?? ...As jobs are shutting down other opportunities are opening up..like when a new party takes over a government

Speak2klein:
Of course but the new jobs will require new skills and the competition will be higher for the few available.

Hi, can you reply your emails?