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Microeconomic Issues

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Microeconomic Issues

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  1. Microeconomic issue

According to CNBC (2020), the US government faced inflation in the economy where, there was a rise in consumer prices, with food prices shooting up where the cost of cars went up, and this was because most of the Americans, with the fear of contracting the Covid-19 by the use of public transport, opted for private means.  Most businesses were closed due to the pandemic and the healthcare, the hotel industry, air travel was affected, and there was an increase in unemployment.  The government was faced with the task of giving out the unemployment benefits, to an estimated 30 million people who had been affected, The price of fuel also went up. From the article, it is evident that the economy can be adversely affected by operational risk events, irrespective of the measures put in place to curb the uncertainties in the economy. Nobody ever anticipated that a time would come, where; a virus would sweep around the globe and adversely strain the economy.

  1. The impact of the covid-19 pandemic

The outbreak of the Covid- 19 pandemic came with negative impacts on the global economy and most countries are facing a hard time in stabilizing the economy. Due to the pandemic, the majority of the nations are going through a face of recession thus endangering their economic structures.  It is estimated that over 430 million were at the risk of disruption with the majority of the affected being from the retail and the wholesale traders.  An example is on the Bangladesh garment sector, which is a global industry solely depended on getting the supply of raw material needed in production from other countries.  In return, they were expected to produce the garments and export them to their retail stores which are based in Europe and North America. The shutdown of china led to the delay in the supply of the raw materials due to the shutdown, which created work stoppages and delay. The impact of the delays led to orders from the retailers being cancelled. The factories, in the long run, were shut down and in some cases, some employees were laid off were around  1 million people in Bangladesh lost their jobs( Fouad 2020). This is an example of a ripple effect, where, the effect in one country, has dire consequences to other countries and this is in terms of trade.

The outbreak of the covid- 19 caused an unprecedented effect on the tourism sector and this happened when countries imposed lockdowns and people were not allowed to travel. By April almost  100% of the worldwide travel destinations had imposed travel restrictions as measures against the pandemic. Out of the 97 tourism destination, 45%  closed their borders completely, 30% of the 65 destinations had either suspended or shut their international flights,  18 % of the 39 destinations opted to implement the closure of their borders differently by imposing passenger entry ban from specific countries.  Airplanes were grounded, hotels closed and travel restrictions were put in place with almost all countries around the globe(” Unwto.org. 2020″) The pandemic was a blow to the tourism sector, whereby international tourism was cut down by a fraction in the year 2020 compared to other years.  From the records,  the decrease led to the tourism industry incurring losses amounting to 67 million concerning international tourism and an amount of USD 80 billion receipts.

The microeconomic issues when not addressed can have very negative impacts on the economy of a country. Recession and inflation are some of the negative microeconomic occurrences with the latest being the outbreak of the Covid 19 whose effects had a ripple effect especially on manufacturing industries around the globe. The tourism sector is another industry that was worst hit.

 

 

Fouad, N. A. (2020). Editor in chief’s introduction to essays on the impact of COVID-19 on work and workers. Journal of Vocational Behaviour

Unwto.org. 2020. Impact Assessment Of The COVID-19 Outbreak On International Tourism | UNWTO. [online] Available at: <https://www.unwto.org/impact-assessment-of-the-covid-19-outbreak-on-international-tourism> [Accessed 14 September 2020].

Used cars drive U.S. consumer prices higher in August. CNBC. (2020). Retrieved 14 September 2020, from https://www.cnbc.com/2020/09/11/us-consumer-price-index-rose-0point4percent-in-august-vs-0point2percent-increase-expected.html.

 

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