With the World Health Organisation (WHO) recently declaring that COVID-19 or the 'coronavirus' has officially become a global pandemic, there's no longer any avoiding the fact that this disease will, over time, have an impact upon every sector of society, including industry. Although most people who catch the virus will suffer only relatively mild flu-like symptoms, the danger posed to those in high-risk groups (the elderly, people with certain pre-existing medical conditions, etc.) is significant. As a consequence, many countries around the world are imposing increasingly stringent controls on their populations: restricting freedom of movement, limiting contact between individuals and, consequently, slowing down economic activity.
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Global markets have taken a sustained hammering as uncertainty continues to undermine investor confidence, with some estimates pointing to an impact equal to, or greater than, the 2008 financial crisis. Big infrastructure spending, such as the £640 billion of investment for roads, railways, communications, schools, hospitals and power distribution announced in the recent UK Government budget, will likely be delayed for the most part. This, in turn, will likely dampen the demand for cement production – throwing off many predictions which had 2020 being something of a turnaround year for the industry.
There is, however, a silver lining to this cloud. Or at least, the references to 2008 should be taken with a pinch of salt. The main reason for this is that the financial crisis and subsequent recession was caused by long-term, fundamental flaws in the global financial system. Gus Fincher, Chief Economist of PNC Financial Services Group, commented on the impact to the US economy: "A recession is not inevitable. If we do get a recession, it is likely to be brief and much less severe than the Great Recession. What we're seeing is caused by something external to the economy." Kathy Bostjancic, Director of U.S. Macro Investors, agrees, arguing that the impact will be closer in form to the kind felt after a natural disaster. Though painful, job losses are likely to be lower, and economic recovery is likely to take significantly less time than the 18 month downturn caused by the financial crisis. Additionally, this time around many governments are offering financial support to companies and employees impacted by the pandemic as they follow government advice to ensure 'social distancing' and 'self-isolate' if needed.
Another key difference between 2008 and today is, of course, the human cost. Although the financial crisis was painful to endure, the current pandemic poses a serious risk to people's lives. Please make sure to follow local government and WHO advice whenever possible and remember to spare a thought for elderly or vulnerable neighbours who may need help.
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The team at World Cement wish you all the best.