Sat. Oct 23rd, 2021

Coronavirus Economic Impact Updates

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Total doses given: 5.7 billion

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The supply chain crisis caused largely by the pandemic makes multinational companies reconsider their approaches to globalization, according to one of the largest delivery companies in the world.

Scott Price, president of UPS International, told the Financial Times today that companies now understand that “relying on protracted supply chains” is a risky business. The damage done by the aviation industry during the pandemic has exposed the vulnerability that businesses face when moving cargo in the belly of passenger planes, especially if not fully repaired after 2025.

Car manufacturers are particularly vulnerable. Toyota Friday reduce its annual production targets after an increase in coronavirus cases in Asian factories, the pressure worsened due to the global semiconductor deficiency, while at German manufacturers large gap between orders and output.

Line chart of the Ifo Institute surveys of German car manufacturers showing that backlogs increase to German car manufacturers

In the UK, pandemic-related problems put extra stress on businesses that are already struggling with post-Brexit trade problems. Today, Marks and Spencer said it’s so reviews the future of its stores in France after problems with the delivery of its popular range of sandwiches and chilled foods.

And although Christmas has not yet been completely canceled, many UK retailers have already warned that buyers can expect reduced product range and less discounts than usual this year. In particular, toy inventories are affected by rising raw materials, high delivery costs, problems in obtaining containers and interruptions at factories. “Factories in China are clogged, so they only make good for what they have orders for,” said a retailer. To make matters worse, disruption of the UK truck driver shortage could still deepen.

As Frankfurt bureau chief Martin Arnold writes, the dual problems of the Delta variant and the supply chain have a big shadow European recovery just as it touches his “sweet spot”. Economists fear that the patterns in the US and China will be repeated, which recovered faster from the pandemic only to lose momentum.

But, Alan Beattie argues in today’s Trade Secrets newsletter, some of the gloom may be exaggerated. (You can sign up for the excellent trade secrets newsletter here).

“Put on some dark-eyed glasses, and as some people have warned, it looks a bit like the stock shocks of the 1970s,” he says, with the implication that we could be on the brink of an inflation spiral. “At the moment, however, we remain optimistic that the Covid-related issues will improve on their own without a broad government’s efforts to manage supply chains, as long as the authorities support fiscal and monetary policy.”

Global economy

Mystery surrounds the reasons for the UK cancellation of a € 1.4 billion vaccine deal with Valneva for at least 100m doses of Covid-19 shots — which dropped shares of French biotechnology more than 40 percent in early Paris trading. The company had previously warned of problems with the export of vaccines between the EU and the UK, but it was not immediately clear why the UK had terminated the contract.

Argentinaruling Peronist party was heavily beaten in mid-term primary, a mandatory voting process that serves as a huge poll on political fortunes. Voters expressed anger at the government after one of the longest-running shutdowns in the world paralyzed the country’s economy but failed to combat Covid-19 deaths.

Ecuador‘s new president, Guillermo Lasso, has achieved his goal to vaccinate half of the country’s population during his first 100 days in office, thanks to a serious vaccine diploma and the private sector to help with logistics. The country has also reached a new loan agreement with the IMF.

Ecuador's vaccination campaign accelerates.  Graph administering cumulative second or only doses per 100 inhabitants


Tony Danker, head of the CBI business group, says he is “deeply concerned” taxes rise on businesses just as it comes from the depths of the pandemic will hit growth in UK prospects. Chancellor Rishi Sunak has
proposed an increase in corporate tax from 19p to 25p, and last week increased national insurance rates for employers and employees by 1.25 percentage points to fund higher health and social care spending.

The downturn in business trip also has an ecosystem of small support businesses, from shoes and taxi services to dry cleaners. London Heathrow against the “ever-changing constraints, costly and unnecessary testing requirements and the lack of a common cross-border approach” to the UK, while moving from its position as Europe’s busiest airport to tenth slot.

Reflecting on his experiences as FT New York bureau chief on 9/11, managing editor Andrew Hill discuss how to react to a disaster. Very few organizations would have built pandemics into their risk planning, but it would be reckless of organizations not to include such lessons for future use, he argues.


Wall Street and European equities rose on Monday as investors warmed that the long-awaited decline in the Federal Reserve’s emergency mortgage-buying program would mean the US economy was by the worst of the pandemic. The S&P 500 had its weakest week since June last week, although it was still close to the peak reached earlier this month.

Rising food prices, which has risen by 40 percent over the past 15 months emerging markets particularly hard hit. Problems with the supply chain, increased transport costs and other disruptions related to pandemics have caused headaches for central banks that are in jeopardy between the reduction of inflation and the emerging economic recovery.

Graph showing food inflation soaring in emerging markets

Latin America was not only the region hardest hit by the coronavirus but also the revival of inflation – fear of a return to the instability of the 1970s and 1980s. The reaction of central banks could have significant consequences for the upcoming elections, writes the editor of Latin America, Michael Stott.

The line graph of the central bank's policy rate (%) showing that Latin American central banks have raised interest rates

The necessities

Preliminary plans for “Vaccine passports” access to nightclubs and big events in England was the weekend has dropped following political pressure. Tomorrow, Prime Minister Boris Johnson will announce a ‘toolbox’ with options to prevent winter stoppages.

Have your say

Davie comment on The day after: how to respond to a disaster – and how not to do it:

It is very difficult for businesses to respond to crises such as:

1. Managers are not competent to make decisions outside very narrow areas
2. Committees governed and by that time circumstances had moved
Spending time filling out risk registers and other boxing exercises usually does not help in real disasters. It’s the fist you do not provide that knocks you out
4. Those that can thrive naturally in such environments are not suitable for large PLCs, or have been trained from them!
That said, given the disastrous decisions Bush and Blair have made, there is a lot to be said about Big PLC’s approaches, but it’s partly down to the fact that they have semi-competent people.

FT event

Join us The future of American healthcare summit tomorrow (September 14) to discuss the challenges and opportunities associated with the rise of remote care, the development of hospitals, the growth of partnerships and more.

Last thought

September has always been a month to reconsider old habits and introduce better habits, but this year more than ever, write Elizabeth uviebinene, author of ‘The reset: ideas to change our work and life ‘. “As the weeks get busy in the coming months, do not forget about the other things in life that you enjoy,” she says. “Our work may not be the only meaningful thing in our lives, even if you like what you do.”

Adult art class
Personal fulfillment beyond the life of 9-5 enables us to gain confidence, new skills and a deeper sense of satisfaction © Getty

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