CASE STUDY 1:

Impact of the Covid-19 Pandemic on the Global Economy

There is no way to tell exactly what the economic damage from the global COVID-19 pandemic will be. However, there is widespread agreement among economists that it will have severe negative impacts on the global economy. Early estimates predict that, most major economies will lose at least 2.4 percent of the value their gross domestic product (GDP) over 2020. Global stock markets have suffered dramatic falls due to the outbreak, and the Dow Jones reported its largest-ever single day fall of almost 3,000 points on March 16, 2020 - beating its previous record of 2,300 points that was set only four days earlier. The economic damage caused by the COVID-19 pandemic is largely driven by a fall in demand, meaning that there are not consumers to purchase the goods and services available in the global economy. This dynamic can be clearly seen in heavily affected industries such as travel and tourism. The same dynamic applies to other industries, for example with falling demand for oil and new cars as daily commutes, social events and holidays are no longer possible. It is this dynamic that has economists contemplating whether the COVID-19 pandemic could lead to a global recession on the scale of the Great Depression.

Despite the clear danger that the global economy is in, there are also reasons to be hopeful. The specific nature of this crisis means that some sectors may benefit, such as e-commerce, food retail, and the healthcare industry - providing at least some economic growth to offset the damage. Finally, there is the fact that the crisis may have a clear end date when all restrictions on movement can be lifted (for example, when a vaccine is developed). Taken together, this means it is at least possible the global economy could experience a sharp rebound once the pandemic is over. There are still many variables that could affect such an economic recovery - for example, a reduced supply of goods and services to meet lower demand could create mid-term shortages and price increases - but there are some reasons to think that, with the right mix of appropriate strategies, some firms may yet be able to maintain their financial sustainable, while others even prosper.

1.Assess the choice of strategies to the travel and tourism industry in light of the Covid-19 pandemic.

[10 marks]

2.Examine the role of 'contingency planning' to firms in business sectors which have been identified as benefitting from the Covid-19 pandemic.

[10 marks]

[TOTAL 20 MARKS]