What industries will be hardest hit by COVID19?

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What industries will be hardest hit by COVID19?

The impact of the Coronavirus pandemic has hit various economies, and various sectors of economies, in different ways to any other previous recession. Once solvent companies are now no longer viable due to the sudden evaporation of any demand for certain goods and services. Here, in this article, we look at the sectors and industries that have been hardest hit by COVID19 and what the ramifications are for the future of the companies within them.

Hospitality

It goes without saying that when the draconian lockdown measures that were largely implemented by governments across the world, the impact of that decision was keenly felt by those in the hospitality industry. Every business from hotels, to restaurants to bars, coffee shops and pubs were all negatively affected by the demand for their custom falling off a cliff. What made matters worse was that there seemed to be no end in sight and no clear time when lockdown would cease – in any country.

Plus, while some countries have now seen a relaxation of their lockdown measures, that has not meant a sudden return to the demand for hospitality services of pre COVID times. Not only do hotels, bars and hotels still have to adhere to social distancing laws thus reducing capacity, consumer behavior has shifted. Customers are apparently fearful for their health of returning to social behaviours such as eating out or meeting up with friends for a drink.

Travel and Airlines

In an effort to contain the spread of the virus as well as stopping any new infection from entering countries, nations closed borders and with that the Coronavirus wreaked havoc on the tourism sector – with particular pain felt by airlines. People ceased to fly unless absolutely necessary and demand dried up for holidays abroad. Airlines had to cancel reams and reams of flights, forcing them to refund monies paid by customers. Many tried to encourage customers simply to have their refund as a voucher to protect much needed cash reserves.

Gastronomy sector hit by Covid-19

Energy

The energy sector, with oil industries in particular, was hard hit by the COVID19 lockdowns. With demand for oil fading quickly, thanks in part to airlines all but grounding their entire airplane fleets, the sector was always going to find it tough to navigate these unprecedented times.

What made the situation worse were the tensions between Russian and Saudi Arabia in the first quarter of 2020. These tensions wreaked more havoc on oil’s barrel price as the two nations continued to produce oil in an attempt to become the world’s biggest supplier. This meant that storage was almost at capacity during the two countries’ price war while they were maximising production. In the States, oil prices for US crude fell below zero for the first time in history.

The future for oil, post the coronavirus, is an interesting one. The immediate need for people to work from home stopped any form of commuting or international business travel. It has made people rethink their travel behaviors. For, even when we can all travel again with the pre-pandemic ease we once had, it remains to be seen whether we will. This has huge ramifications for the demand for oil and its prices.

Education

Perhaps one of the most interesting and surprising sectors that has been negatively affected by the global pandemic is education. The practical implications are apparent enough – children and university students were, by and large, told to stay at home and be homeschooled.

However, economically speaking, many educational institutions are still a business and therefore may struggle to keep going if the pressures that the pandemic places on them continue. If students cannot attend schools or universities – and pay fees – the whole business model is likely to fail. Plus, even in places where lockdown measures have eased, a second spike in infections is still a possibility, meaning that schools and universities may well be closed again.

Retail

While in some parts of the retail sector, companies did well, others have severely struggled and floundered. Firms like Amazon and grocery companies have all seen demand for their products increase as people stayed home and had to shop for their consumer products and food in different ways. Grocery supplies, in particular, saw a massive surge in demand as people were forced to eat at home more.

However, the lack of footfall in physical shops, as well as the social distancing measures that had to be implemented on distribution outlets, has meant that some retail companies have struggled to switch from a physical store with a side online business, to a purely online one. Clothing chains seemed to be one of the most vulnerable as people no longer bought new apparel given that they didn’t socialise.

Construction

Construction companies around the world saw a steep decline in productivity from March 2020 onwards. To protect the health of its workers as well as stopping the spread of the disease, construction site employees were told to stay home.

In countries with suitable job retention schemes, incomes were protected, but the companies themselves still were unable to make any money from the sudden halting of any building projects. Equipment lay untouched, racking up costs by just sitting there for weeks on end, with no hope for being used for a long while.

House building companies were hit hard as well by the fact that people were told to delay moves until it was safe to do so.

Manufacturing

Manufacturing is an industry that has also suffered many difficulties throughout the pandemic. Given that the nature of its business is largely one that requires people to be in work to complete tasks, the manufacturing sector faced many setbacks when some lockdown measures in certain countries forced factories to close. Weaknesses in global supply chains were highlighted and production of goods were severely affected by companies that had to operate with a weakened labourforce that could only work for a limited number of hours too.

Real estate

Real estate firms were put under a lot of pressure in countries which implemented stringent lockdown measures. While many firms tried to keep afloat by moving online as much as possible, the very nature of the real estate sector meant there was limited scope for how much it could achieve with people being told to stay indoors. As mentioned before, people were also told to delay moves if possible to slow the spread of the disease which has obvious ramifications on the output of the real estate industry.

While some countries have seen a strong bounceback in their real estate firms now that many measures have been relaxed and business can be carried out more easily, the lasting economic implications are yet to be seen. With more and more people becoming unemployed and with incomes decreasing for many as a result of the havoc COVID19 has caused, house moving and purchasing could well see a depression in its prices due to a lack of demand.

The Industries Hardest Hit by COVID19 – The Bottom Line

The above list only highlights the hardest hit of industries due to the lockdown measures used around the world during the pandemic. Sadly, it is not exhaustive and there are many other industries that have also felt the force of the implications of people staying in their homes to protect themselves against infection.

How long lasting the effects of the lockdown measures will be remains to be seen – particularly as no vaccine is yet available. Some companies within industries have already had to close along with millions of people finding themselves suddenly unemployed. This has obvious repercussions on productivity in the future, so the likelihood is that many industries will continue to struggle for a long time yet.

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