Bankruptcy, unemployment, and poverty: what COVID-19 could lead to

The COVID-19 pandemic has swept rapidly across the world, with what was thought to be a regional outbreak in China turning into a full-blown global health crisis within months. It has been incredibly difficult to contain the spread of the virus, especially in the absence of a vaccine, and so most countries have had to resort to strict quarantine and lockdown measures to try to slow down the virus. The likes of Italy, France, Spain, the United Kingdom and India are just five of the many nations who have enacted full lockdown measures for extended periods.

While this is necessary to stop the virus from infecting millions of people, it has had a huge impact on the world economy. With outdoor activities coming to a complete standstill, most businesses and companies have taken huge hits to their revenue and profitability, with layoffs and rising unemployment the direct result of this crisis.

Major stock markets have been on something of a freefall, with most of them falling over 20% since the start of the year. The majority of those down moves have come in March and April, as lockdown measures started to kick in across the globe and economic activity shuddered to a halt. While central banks have vowed to support their economies and are deploying stimulus packages, it remains to be seen if that will be enough to stop markets from plunging new depths in the weeks to come. This has serious implications for anybody with retirement or pension accounts which invest in the stock market, as the value of their retirement funds is taking a serious hit at the moment.

Unemployment has also reached new highs, with statistics from the United States making for grim reading. Jobless claims were over 5.5 million over the last week, pushing the four-week total to over 22 million, or about 12-13% of the population. Those are scary numbers, and things are projected to get even worse, with many economists now predicting that the unemployment rate will hit 20% in the United States in the coming weeks. This will only lead to a rise in poverty and hunger, as thousands of businesses are forced into bankruptcy.

The travel industry is one example of such a sector which has been devastated by this crisis. Hotels are reported record-low occupancy rates, while there are over 100 countries with some form of travel restriction at the moment. Airlines are suffering globally, while even local transport firms are struggling because people are just not allowed to step outside their homes.

Another example is the casino sector, which relies on footfalls. The major gambling hubs of Las Vegas, Macau, Monreal City, Atlantic City etc are deserted, leading to job losses across the board. As an example, two casinos in the Saskatchewan province of Canada, Casino Moose Jaw and Casino Regina, laid off over 500 employees at the beginning of April. While these layoffs have been stated to be temporary, with those people being brought back once this current emergency is over, it is striking that one of the best casinos in Canada has had to take such measures. It is not the only one, with similar stories across the country, and indeed, the world.

The current global health emergency has meant that there are millions of people who are suddenly without a livelihood and thus without any source of income, at a time when they probably need it the most. Whenever this pandemic blows over, the world will be a hugely different place, with a lot more poverty and unemployment as a result.