These sectors of the economy “will not return” from the coronavirus pandemic


As many countries begin to break out of the blockade following the coronavirus pandemic, the focus has been on economic recovery.

The potential shape of this recovery (U-shaped, W-shaped, V-shaped or even “square root”) has divided economists and strategists. The 50 EE states. The United States, as well as most European countries, has taken steps to reopen after blockade restrictions.

Businesses resume work, stores and restaurants reopen, and airlines prepare to resume flights.

However, investment director of London & Capital wealth management company Pau Morilla-Giner said that certain sectors of the economy would not return, at least not in the next five years.

These include levels of consumer spending, many jobs, occupation of commercial real estate, levels of global tourism and spending on luxury goods. He added that the boom in venture capital-funded startups and foreign student exchange levels are not expected to return in the short to medium term either.

Morilla-Giner said that consumer habits, especially among young people, will change permanently as a result of the pandemic. He said much attention has been paid to the rate at which economies should reopen, but so little to “the behavioral impact on consumers”, adding that people would certainly spend less.


For many millennials and Generation Z, a mantra will now dominate spending habits: “I will never be financially prepared for a crisis again.” Uncertainty will bring prudence, prudence will bring frugality

“For many millennials and Generation Z, a mantra will now dominate spending habits:” I will never be without financial preparation for a crisis again. “Uncertainty will bring prudence, prudence will bring frugality,” he said.

“Consumer spending accounts for around 70% of GDP in the western world, so this will have a negative effect on GDP growth rates,” he added.

Unemployment claims in the United States United States They increased by 2.1 million last week, exceeding the total of more than 40 million since the coronavirus pandemic hit the country. The increase was less than the 2.4 million requests made the previous week, but it was the tenth consecutive week with first requests over 2 million.

Morilla-Giner said many of these figures highlight “the evolving scale of the economic damage and its probably deep resonance,” warning that many works would not return.

“There is hope that many of these jobs will return as the economy reopens, but the risk is that the increase in bankruptcies will cause many unemployed workers to be sidelined,” he said. declared.

The travel and tourism industries have been particularly affected by Covid-19, and many countries have introduced travel restrictions in addition to requests to stay at home. Airlines across Europe and the United States USA, including American
AAL
-4.28%
Delta
DAL
-2.76%
and united
UAL
-2.64%
They asked for state aid in the fight for survival while the planes remain on the ground.

Morilla-Giner said tourism is the “Achilles heel” of the global economy because it is so discretionary.

“It took US airlines six years to return to profitability after September 11 and eight years for fares to return to what they were in 2000,” he said, noting that travel and tourism accounted for 10% of global GDP and supported 10% of all jobs on the planet before Covid-19.

The World Travel and Tourism Council has declared that the pandemic endangers one third of these jobs, $ 100 million and $ 2.7 trillion in GDP.

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