It’s difficult to overstate the impact of the novel coronavirus (COVID-19) pandemic on the global economy. Despite central banks’ best efforts, markets remain volatile, with manufacturing, oil and gas, and consumer goods among the worst-hit sectors.
A recent analysis by the nonprofit think tank Foreign Policy Research Institute titled “The Effect of COVID-19 on the U.S. Economy” outlines the grim situation. It states that while consumption accounts for 70 percent of America’s gross domestic product (GDP), the pandemic has caused an unprecedented slowdown “as businesses close and as households hold off on major purchases as they worry about their finances and their jobs.”
Manufacturing, which accounts for 11 percent of U.S. GDP, the study continues, has experienced disruptions thanks to the shutdown of global supply chains and factories, a trend which is expected to continue as the pandemic rages on. This will have an outsized impact on chemical manufacturing, warns multinational professional services network PwC.
The oil and gas sector has also sustained incredibly sharp price reductions, documents a recent outlook analysis by the U.S. Energy Information Administration.
Such factors create economic conditions that sideline inventories, and will prevent manufacturers from keeping up with demand once consumer spending inevitably rebounds.
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