Worldwide economies are continuing to struggle due to the Coronavirus outbreak. Many economists are trying to predict a forecast that the outbreak and its measures have had on economies. The UK GDP figures for Quarter 1 start to tell the story so far. An initial decline of 2% within the UK and an almost 4% contraction from the Eurozone; but, as stated, this is just the start of the decline. A realistic overview of the lockdown measures will only be visible with the Quarter 2 figures with the Bank of England forecasting an almost 25% contraction.
Lockdown & Social Distancing have had a worldwide effect on demand across all Sectors of the Market. Furlough schemes across the UK have helped to alleviate some pressures on businesses however a rise in unemployment and business closures are only just a matter of time.
International funds and economists have now cut the predicted 2020 Growth expansion from a 3% increase to a 3% decline. With many countries that benefit from travel, tourism and hospitality taking a hard hit to growth. The annual GDP forecasts show declines that are only comparable to the Great Depression.
Industry Reaction & Key Movers
The UK Lockdown has closed almost all the Foodservice and Hospitality Sector. Retail supermarkets however has seen the opposite with a rise in demand. Across April the UK overall inflation dropped sharply mainly due to the fuel and energy deflation. Food pricing remained standard but this in turn masked the inflation across Supermarkets. Due to the Lockdown measures and social distancing consumers tend to reduce spend on other sectors and prioritise food costs. This is reflected in the increase of food prices within Supermarkets and Grocers across April.
Food Markets will continue to fluctuate with panic buying forcing prices higher than usual on long-life commodity items this is also true for non-food ranges. What is interesting however is that due to port closures and the reduced movement of goods it has been able to keep logistic goods prices firm.
With stockpiling of rice, pasta flour there have been increased pressure on foodservice suppliers. This has forced their hands to enforce a price increase. As an example Italy are the largest rice producer in Europe and typically export around 60% of all its rice products. With rice being one item being stockpiled prices increased over 20% in a short space of time. Alongside this other global exporters such as Vietnam and Thailand have temporarily suspended their exports to ensure supply.
Fruit, Vegetables and the Future
The UK’s agricultural sector has taken a large labour shortage with the usual seasonal influx of overseas workers now being put on hold. The result of this is product shortages as crops remain untouched and unfarmed leaving local businesses in turmoil. Alongside this is a spike in demand on fresh produce such as apples in particular across Europe due to its perceived health benefits. Poland for example saw an increase of almost 20% across February – March. This is a trend that appears to be continuing on all healthier based food sources.
Forecasts predict that the issues we faced in Quarter 1 will only continue to put pressure on businesses throughout the next few months. As aforementioned we only have a true depiction of spend across Jan to March with full containment measure only taking effect as of April 2020. One thing is for certain that businesses and people alike will struggle financially. Only future analysis will fully measure the impact the pandemic has had on our economies.