How the coronavirus related quarantine will influence the economy

We have now been working from home for a little more than a week due to the coronavirus quarantine. Based on this first experience it is possible to make some predictions on how the situation will influence the economy in the near future. The results might look a bit scary, but the logic is quite straightforward.

Very important thing to understand about how the economy works is the concept that "Your spending is someones income". Meaning that in the big picture money is not something physical, but an abstract concept - it is more like a measurement unit that measures value or work. Therefore saving money is different from saving something physical. If you save for example sugar then you will later have more sugar that you can then spend. If you save money then this is away from the overall process of economics and if you don't pay the others, then the others will not pay your salary.

Now when we have the first real experience on remote working and living, we can look at how our consumption has changed and by extrapolating that we can easily see what will happen to the different sectors in economy.

The first thing to note is that while in quarantine and working remotely you spend much less. No cinemas, no lunches in the restaurant, no going to the gym, no shopping of clothes. Therefore, if everybody does it - as they are doing now - the economy will shrink proportionally. If your monthly costs are 20% lower when in quarantine and you , then the GDP will shrink more or less 20%.

Naturally this is not evenly distributed and on some goods and services the spending increases. Here is my prediction on what will happen to different sectors in the coming months:


Tourism, Cruiselines, Airlines, Airplanes, Hotels
Significant shrinkage
Office real-estate
Significant shrinkage
Home real-estate (Bigger homes to house all the remote-workers and students)
Moderate growth
Food delivery
Significant growth
E-groceries
Significant growth
Groceries and food industry
No change
Private cars
Moderate shrinkage
Trucks and transport
No change
Restaurants
Significant shrinkage
Takeaway food
Moderate growth
Telecom, Internet, Remote working tools
Significant growth
Financial sector, Banking
No change
Electronics, Computers, Screens, Robotics
Moderate growth
Computer games
Moderate growth
Online media, online music and films
Moderate growth

It is also important to note that financial support by the governments does not change the patterns of consumption. If you are quarantined you will not go to the restaurant even when the restaurant owner has got tax subsidies and can lower their regular prices 20%. So the waitresses will be unemployed anyway. Government and financial support however is very important as it gives the companies and people a buffer to adjust to the new situation and time to find new business and work. For example the subsidies might allow the restaurant to organise sterile cooking and packaging and the kitchen staff can continue offering takeaway lunches.

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