The coronavirus crisis we are dealing with right now is unprecedented in both scale and consequences. Almost the entire planet was brought to a standstill in the effort to reduce the spreading of the virus and to ease the burden on health systems worldwide.
Never in recent history, not since the global economy became deeply interconnected, has such an event occurred, so it’s rather difficult to assess its economic implications. One positive thing that needs to be stated is that, today, compared to other periods in history, many of us have options such as working and studying from home, and ordering groceries and other necessities instead of going out.
Certain industries, such as IT, online retailers, pharma and biotech companies, are well positioned right now and are already seeing spikes due to the coronavirus crisis. However, other sectors of the economy, like tourism, hospitality and manufacturing, are bearing the brunt of this crisis.
The economic impact of the crisis could amount to 2.4% of global GDP
A World Bank report released a few years ago estimated the possible risks associated with a global pandemic – the exact scenario we’re dealing with right now. Their findings suggest that a pandemic as serious as the 1918 Spanish Flu might end up erasing 4.8% of the global GDP, while a moderate one – which, fortunately, seems to be the current situation – could amount to 2.4% of the global GDP. To compare, a weak pandemic, like the 2009 H1N1 one, had an impact on the global GDP of less than half of a percentage point.
The United Nations estimates that the coronavirus crisis will lead to a 6.7% drop in the number of work hours performed by employees worldwide during the second trimester of 2020. Looking at the United States, more than 26 million Americans claimed for unemployment benefits since the crises started, so the economic impact of the pandemic looks daunting at the moment. Hopefully, the $2 trillion stimulus package agreed on by the Senate will provide enough momentum for the economy to power through the setback.
Certain industries will emerge strengthened from the crisis
Some sectors of the economy are in huge demand right now, whether we’re talking about the IT industry, which is now striving to ensure remote working, learning and connecting solutions for tens of millions of people, or the biotech companies racing to find new treatments and vaccines against COVID19.
Other sectors, such as online retailers, delivery companies and media streaming companies, are benefiting from people being cooped up at home and needing not only groceries and other products but also entertainment. So, here are the main industries that stand to gain from the current crisis.
The tech industry stays unscathed
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Communication and teleworking apps
Social distancing, closing schools, work-from-home policies and government lockdowns throughout most of the US – and the wider world – gave a huge boost to IT products that ensure remote connectivity. According to mobile market data provider App Annie, business apps registered more than 60 million downloads during the third week of March alone, up 45% from the previous week and a whopping 90% more compared to the weekly average for business apps downloads in 2019. During the same week of March, Zoom Cloud Meetings was downloaded in the United States 14 times more than the weekly average during the last trimester in 2019. Communication app Skype announced that, in March, they saw a 70% increase of their daily users.
Companies are also doing their best to accommodate customers during this time. Google offers the premium features of Hangouts Meet for free, while Zoom is also free for K-12 students.
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Telemedicine apps
Apart from health emergencies, people in need of medical attention during this period prefer to avoid hospitals and to get advice from telemedicine apps. Whether they want a doctor’s input for coronavirus-related symptoms or for other health issues, patients are definitely flocking toward remote medical care.
Amwell, one of the country’s largest services of this type, raised $60 million in equity in mid-March, while the company confirmed that the usage of its app grew by 158% since January. PlushCare, another large telemedicine provider, says that appointments increased by 70%, and the company is in the process of hiring more doctors to meet the demand.
Pharma and biotech companies are essential for defeating the pandemic
Whether racing to come up with a vaccine or a new treatment for the coronavirus, or already owning drugs that are touted to work against it, pharma and biotech companies are getting a lot of attention right now. The sector is getting research funds from governments and private entities. Also, while the rest of the stock market was plummeting, the shares of many such companies have held, or even went up.
Companies such as Gilead Sciences, which owns Remdesivir, an antiviral that might work against COVID 19, saw its shares growing from around $65 during October 2019 to over $81 during the third week of April. After receiving emergency FDA authorization to manufacture coronavirus testing kits, Abbott Laboratories saw its shares climbing from about $63 on March 23 to $98 on April 20th.
The United States’ government pledged $3 billion toward the research and the development of a vaccine, while another $800 million will be used for finding treatments for the disease. Other governments are doing the same – the UK government dedicated a total of almost $680 million to coronavirus vaccine research. These funds will definitely boost pharma and biotech companies in the US and all over the world.
Online retailers, food and household product manufacturers are in high demand
Stocking up with essentials, such as long shelf-life foods and other household products, is a natural human reaction in times such as these. Manufacturers of products such as canned or dried foods, detergents, toilet paper, disinfectants and so on saw the demand for their products increase exponentially. Due to social distancing rules, online retailers are registering record volumes of business.
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Online retailers
While ordering books, clothes and electronics online was already the norm for a lot of people, convincing them to purchase groceries the same way was a challenge. But this will probably change now, as people are trying to avoid public spaces as much as possible. Amazon alone announced the intention of hiring 100,000 new employees to meet demand during this time.
According to a recent Adobe Digital report, e-commerce increased by 25% from March 13-15 onwards, when social distancing measures started to be recommended strongly, compared to the baseline period of March 1 to 11. The same report states that the daily online sales of groceries doubled year-over-year for the first two weeks of March.
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Home improvement stores
Who knew that one of the effects of the pandemic would be that everyone is suddenly a DIY enthusiast? People realized that they have a lot of time on their hands, so they started doing all those home improvement projects they’ve been neglecting, from painting walls to fixing pipes. Also, the need for creating home offices generated demand in the home improvement sector. Home improvement stores also have delivery services, which definitely helped them sell more during this period.
Google Trends shows that the interest for “home improvement” and “DIY projects” search terms grew significantly. Online interest for “DIY projects,” on a scale from 0 to 100, was at around 50 during the third week of April 2019, while between 12 and 18 April 2020 it increased to 96. The same evolution can be seen when it comes to “home improvement” – the interest for this search term peaked at 100 between 12 and 18 April, after an average of 60 points during most of the previous 12 months.
Home improvement stores are also performing well in the stock market. Home Depot shares trade at $206 as of April 20, a significant growth compared to March 20, when they were trading at $153. Lowe’s shares also recovered the losses suffered in March, growing from around $66 per share as of March 20 to $95 per share as of April 20.
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Food manufacturers
Staples such as flour, rice, pasta, beans, canned foods and so on are in high demand, as shoppers, faced with uncertainty, are making sure they have enough supplies around the house to last a few weeks or so. According to Statista.com, pasta sales in online grocery orders increased by almost 700% year-over-year, as of March 20.
Companies that manufacture such foods have thus seen a huge spike in their activity. Shares of the Campbell Soup Company were trading for under $40 in April 18, 2019 but surpassed $50 as of April 20, 2020.
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Personal care and cleaning product manufacturers
Maintaining personal hygiene and cleaning all the spaces around us are some of the most important weapons we have for staying healthy and fighting off the coronavirus. Whether it’s soap, hand sanitizers, detergents, wipes, toilet paper, chlorine-based disinfectants, hand creams and so on, the sales for such products grew exponentially.
It’s no wonder that companies manufacturing personal care and cleaning products are doing well right now. Shares of the Colgate-Palmolive Company were trading at $72.19 on April 20, compared to $62.08 on March 20 and $69 during the third week of April 2019. Procter & Gamble was trading at more than $120 per share as of April 20, higher than during the third week of April 2019, when shares were at $106, and also above the $97.7 value a month ago.
The services people need while cooped up at home
Access to some forms of entertainment is essential for our mental health when living under lockdown, therefore companies that provide such services are thriving. Also, because students are needing to move out of dorms and other categories of people have to leave temporary accommodation and head home, self storage is sought after more than other branches of real estate industry.
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Online streaming businesses
HBO Go said they witnessed a 40% surge in the time spent on its platform during the second half of March 2020, compared to its four-week average. People were interested in a variety of series and movies, including a documentary on Ebola, with views more than 7 times higher in March than during the previous weeks. Also, daytime bingeing on three episodes or more of the same show increased by 65% in March.
Netflix already has 160 million subscribers worldwide and smashed its own forecast of adding 7 new million customers during the first quarter of 2020, by announcing it had actually added a whopping 15.7 million new paid subscribers. The company’s shares grew from around $377 during the second half of April 2019 to more than $437 during the second half of April 2020.
Virtually all college students in the US had to pack up their things and leave campuses this March, due to the coronavirus epidemics. Also, millions of employees needed to find extra space at home for setting up an office – and these developments increased the need for self storage.
The industry reacted by making sure their facilities stay open throughout the country and by increasing health and safety measures, such as moving most of the administration online and making sure that social distancing and disinfecting rules are being followed strictly.
According to a recent Axios research, electricity consumption in the self storage sector increased by 23% between first and fourth weeks of March, the most of all the industries taken into account. This means that the self storage sector is in pretty high demand at the moment.
Check out who’s hiring right now!
On the jobs front, more than 26 million American employees filed for unemployment benefits since the beginning of the coronavirus pandemic, according to Labor Department figures. Hopefully, many of those jobs will be returning once the virus is under control and we resume our normal lives.
However, many industries, from shipping businesses and drugstore chains to healthcare companies and online learning platforms are hiring right now, in order to meet coronavirus-related demand. CVS needs about 50,000 new employees in its stores, while Walmart will be hiring 150,000 temporary workers by the end of May. So, if you’re looking for a job at the moment, not all odds are against you – there are actually some good opportunities out there.
It’s yet unclear how long this pandemic lockdown is going to last, or how fast the economy will recover after it. However, it’s important to keep in mind that not all is bleak economically, and certain industries will emerge even stronger from this crisis.
