Site icon Personal Finance News

Pandemic or Not, Some Assets and Services Grow Ever Hotter

stock exchange board

Photo by Pixabay on Pexels.com

There is no doubt that the coronavirus pandemic will change the world. In fact, it already has changed the world, and it will keep going. Many of the reports and forecasts you can see today show devastating losses in some industries. Forecasts from economists and other experts predict a grim future drawing parallels with the Great Depression. Seeing how many businesses are failing because of lockdowns, a tragedy seems inevitable.

However, while this all is happening, some industries are growing and values of some assets are going up. It’s true that many companies are failing, but there are also those that report record increases in revenue. The stock market has all but recovered, largely due to the rapid gain by tech giants.

It’s true that there is a lot of uncertainty still. It’s also a fact that the global economy is going into a dangerous recession. However, while stressful the situation is not necessarily tragic. Changes will continue to spread as investors are reallocating their funds. Businesses will close and others will open. The change in consumer behavior will stick and we can expect to see even more overall digitalization.

But the real question is whether the powers that are going strong will be enough to hold the global economy back from total collapse?

Some Industries Are Doing Very Well Despite the Pandemic

Looking back at previous economic recessions, one thing remains quite stable. As the economy crashes, so do house prices. However, while the COVID-19 crisis is definitely one of the worst, its effect on real estate is different. Home prices continue to rise. In some countries, for example, Germany and South Korea, the housing market is growing so fast that local governments have to implement buyer restrictions. Even in America, which is admittedly struggling during this crisis, real estate value keeps increasing.

For the real estate market, the main reasons for growth are policies and a big change in buyers’ preferences. Lenders have to lower interest rates in response to the crisis. Governments in richer countries also launched policies that offer some leniency, like banning foreclosures for the duration of the pandemic. People also became more interested in purchasing bigger homes with gardens in suburban areas. The latter is, no doubt, in response to many companies accepting remote work as the new norm.

Residential real estate isn’t the only sector that’s doing well. Technology giants and startups alike are enjoying robust growth in this otherwise difficult time. As so many aspects of our everyday lives are getting transferred online, businesses that facilitate this transition are getting an unprecedented boost in interest.

Investors definitely caught on to that. Therefore, they started putting their money into tech companies and other industries that are fueled by the pandemic. Healthcare is definitely at the top there.

Even retail trade isn’t doing too badly. It’s true that the overall consumption level has gone down. This is an expected trend for an economic recession. However, online sales are growing super-fast. Therefore, online retailers, and the ones that were quick to change, are getting bigger revenues despite the pandemic.

How Does This Growth Affect Other Businesses?

While many people deeply regretted their lack of savings during the lockdowns, those in a better financial position became much more active. Investors responded to the great stock market crash with an expected panic.

However, as noted above, many of them realized that pandemic or no, some businesses will continue to thrive. Therefore, they started working on their portfolios, which resulted in a growing demand for international money transfers and remittances. Those investors and many businesses needed to buy or sell assets abroad ASAP, which boosted the industry. Migrant workers, who managed to retain their jobs, also increased their remittances to help their families. And businesses and individuals who deal with forex trading started to capitalize on the volatility shaking the global FX markets.

That’s how international money transfer companies started to grow during the pandemic instead of going bankrupt. The latter was a possibility because international trade has almost stopped during lockdowns and many small businesses (main customer group for these companies) closed.

The money transfer industry isn’t the only example of businesses affected by the unexpected changes that happened during the pandemic. Businesses that offer products or services that can be valuable in the “new world order” are also getting more clients than they could have dreamed of even a year before.

This “new world order” relates to the change of people working from home. The trend enforced during lockdowns is here to stay. Already there are many reports of big companies reevaluating their staffing policies and having more employees work from home in the future. So, businesses that offer home fitness equipment and courses, crafts materials and tutorials, board games, and all other things that make staying at home more productive and fun, are now growing extremely fast.

What’s in the Future? Will the Global Economy Pull Through This Crisis?

The current economic situation both does and doesn’t look grim. However, there is one huge problem ahead, which is uncertainty. The simple truth is that no one can make any kind of accurate prediction in the current conditions. This situation is unprecedented and it’s impossible to say how exactly it will develop. There are too many factors at play here and many of them depend on individual governments’ responses. Those, in turn, de0pend on the actions of individuals within the governments.

All in all, the only thing we can be certain of is that we are uncertain of everything.

Will the bubble of relative comfort for investors and a safe haven for some businesses burst?

It’s highly likely that it will. Government support programs are drying up yet another wave of the pandemic and possible lockdowns has already started to hit. That financial support is what created this comfy cushion in the first place. Therefore, with no money and growing unemployment, consumer ability to actually buy something will plummet.

If this happens, the global economy will truly enter one of the darkest periods in history. And it won’t climb back out of it fast without another massive infusion of reserve funds. However, there might not be any reserves left by the time this injection is most needed.

Exit mobile version