With the Corona outbreak taking place globally, we must understand the impact on the economy.
Over $1.7TR had been wiped out of the NYSE value, which had many contemplate their next moves.
Whether it’s flying to attend conferences or running new venture partnerships and events, business people are now bound to focus their efforts elsewhere.
Corona, Trump and US-China trade agreements
Putting all your eggs in one basket has seriously hurt businesses before.
President Trump’s decision to hedge these risks with China had been a smarter choice than others had anticipated, despite obvious critique.
No, we don’t believe the Corona spreads via goods (necessarily), but even experts are not sure how it spreads.
To some degree not accepting tangible goods from outbreak hotspots had been a (somewhat) wise decision.
Digital currency – worldwide sensation or the flavour of the month?
Last week, we spoke about The Fed considering the notion of a digital dollar.
The US isn’t the first one to consider it, as the EU, China and now even Canada considering it a viable option.
In essence, Central Bank Digital Currencies (CBDCs) are crypto-currencies issued by the government, backed by a tangible fiat currency.
This is a way for governments to regain control over the uber-volatile cryptocurrencies.
This is a way governments regulate and retain value which could be wiped out by 33% within a week.
Great minds (may not) think alike?
Despite the consideration of a CBDC, The Bank of Canada has still been contemplating this notion for a while now.
It has also been stated that a CBDC would not be issued unless the Canadian public decides to adopt it in the first place.
This means that unlike the other governments considering it, the Canadian one believes the people should be considering it, not policy-makers.
This means that this decision is up to the Canadian public, which may vote to keep the Canadian dollar intact (including the use of cash in the process).
Sanctions and innovation
The use of blockchain and crypto, in particular, has made the Chinese government the number one country in high-end surveillance.
Despite what may be understood from this, we aren’t giving them kudos (just yet).
But, this has helped with isolating and quarantining even easier.
It also helps the Chinese economy, as more and more investments are being put into finding a cure for the disease.
Serendipity in disguise, if you will.
Economy going down…?
One of China’s locomotives, The AliBaba Group, has suffered immensely from the recent outbreak.
More and more customers decided to cancel their orders.
This has helped sellers and the website(s) in perfecting better e-commerce techniques, now matching the same standard as Amazon’s and eBay’s.
Since this problem isn’t local and affecting the entirety of the region (and elsewhere), opportunities may arise.
With flights being cancelled and airlines merging, the end-user may benefit from better service.
This means there is less competition, but it also means that competitors who aren’t good enough would fail and go into insolvency issues quickly.
How entrepreneurs may benefit
With flights being cancelled and hotels being at half of their occupancy, tickets sell for less.
It means that startups which contemplated attending events overseas may now do so because it’s cheaper.
It means there would be a shift in manufacturing from SEA to Africa or even the CEE region.
More and more events would be attended online, which fosters a better sense of community and solidarity.
It also fosters better hedging techniques in terms of risks, as fewer people would be inclined to go where everyone goes.
It means that smart funds would be looking for better opportunities in other areas, thus empowering ecosystems elsewhere.