Due to the travel restrictions, lockdowns, and shelter in places around the world, there has been a freeze in trade around the world. In the United States, about 80 percent west coast ports have reported that they have significantly lower inventories due to the actions caused by the coronavirus. Now this may not seem like a shock, however, it does mean that a large sector of the world economy is slowing down, which is trade. Now the trade of goods will recover with time, which is expected. When there is no risk of virus transmission, trade will be able to continue between countries, but there is a side of trade that could be impacted in the future, even though the trade of goods will most likely recover back to normal levels. That would be the trade when it comes to services.
Trade on the services side is a very significant part of trade for some countries. Let me start by explaining the difference between trading goods and trading services. In very basic terms, trading of goods occurs when a tangible product is traded between a resident and non-resident, while trading of services occurs when a transaction occurs of an intangible product between a resident and a non-resident. An example of a good being traded would be when China sells sheets to the United States. An example of a service being traded would be when a financial advisor from the United States charges a Chinese businessman in order to look over their portfolio.
Between these two types of trade, the coronavirus could lead many businesses towards an evolution in the amount of trading of services they utilize. Many of these services are utilized when someone travels on business. Hotels, restaurants, and others are services are used when people travel in order to have meetings, check ins, etc. for business purposes.
In the present day of the virus, many of these meetings are happening online over things like Zoom or Google Meet, where the consumption of these services is not prevalent. If businesses are able to maintain the same level of efficiency and reduce their costs by using the online meeting services, then there could be a decrease in demand for all of the services used when business people travel for meetings across the country and the world.
If this change were to come into fruition, there would be a sector of the economy that would still hurt massively after the world is over the coronavirus. A big area of the services side of the economy would be airlines. There are many people whose job requires them to travel on business, internationally and domestically. If less of this travel occurs, airlines could continue to see losses after the coronavirus. This could possibly be the same situation for other travel based services.
One of the overlooked parts the coronavirus is the impact that it could have on the way the future economy will change due to what has happened. Massive changes occurred after the Great Depression in the United States when it comes to economic safeguards for American consumers, and it should be expected that there will be changes to the way our economy operates because of this present issue. The world adapts to problems that happen in the world, and the way countries interact with each other economically is now at the top of the list.