Business reaction to the introduction of 30-day quarantine
Today, during the Government session, it was decided to extend the quarantine until April 24 and introduce a nationwide situation of emergency in Ukraine.
The European Business Association understands the unprecedented situation with COVID-19 that is currently occurring around the world and the importance of preventative measures to curb the spread of the virus and maintain public health.
Earlier this week, the Association conducted a quick survey of entrepreneurs to find out about the impact of the quarantine on their businesses and their response in case of the quarantine prolongation.
Thus, almost half of the companies (48%) have already incurred between 20% and 50% of revenue losses. Another 16% decided to change staff salaries, and 14% decided to cut staff. Based on the survey results, the business response to such a decision of the CMU will be as follows: 23% plan to reduce staff salaries, 17% plan to reduce staff, another 6% plan to partially close the business, 23% do not plan any reduction or downsizing, and 31% will search for new niches to develop their business.
Obviously, a halt in economic activity is already affecting both individual businesses and the economy in general, which in the long run may impact people′s welfare. If tough restrictive measures continue for another month, then the most pessimistic forecasts may turn out to be a very optimistic one. After all, the reserve power of companies is running out while small businesses are already exhausted. That is why, along with saving lives, it is also worth thinking about saving the economy.
Thus, according to preliminary estimates, the basic forecast of the quarantine effects is the reduction of Ukrainian GDP by 4%, and in a less optimistic scenario, the fall can be up to 9%. Undoubtedly, maintaining the health of citizens is a top priority in the current situation. And now, the reinforced restrictive measures will help to achieve it.
However, surely it is worth taking rational and constructive steps now because in a month it can be too late for them. The frozen economy may put employment, social payment and benefit programs, and even health system under the threat. In addition, hundreds of thousands of people are at risk of losing their jobs.
Therefore, the business community urges the Government to act deliberately and make decisions that take into account the long-term economic impact. After all, stopping economic activities can result in devastating consequences for the entire population in a few months. According to the expert estimates, they will be even worse than the pandemic itself, and it will take years to rebuild the economy. Therefore, we want to believe that the authorities understand all risks when deciding on a 30-day quarantine and a nationwide situation of emergency.