Amid the increasing economic difficulties faced by countries all over the world during the COVID-19 pandemic, Kia Motors said it is considering shutting down three manufacturing plants in its home country.
The Korean automotive giant told its labor union in South Korea that it wanted to suspend operations of the three domestic factories as the coronavirus outbreak destroyed the company’s initial export projections to Europe and the U.S on Monday, April 13.
“Kia Motors is currently reviewing the suspension of some of its plants in Korea in response to declining global demand due to COVID-19. However, a decision has not been made at this time,” the company said in a statement.
The union was still mulling over the one-week suspension plan because negotiations over pay were still ongoing.
Kia Motors’ share price fell over three percent, while affiliate Hyundai Motors also reported a two percent decrease. The Korean market fell just shy of one percent at the time of trading.
Both Hyundai and Kia Motors have suspended most of their far-flung factory operations outside South Korea and China as the coronavirus continues its spread beyond Asia.
Overall, South Korea’s exports for the first 10 days of April went down around 19% from the same period a year earlier, far below a jump of almost 21% over the same timeframe in March. Shipments of vehicles and vehicle components during the period went down significantly in both cases.
Grim economic outlooks and record packages
Multiple countries across the world have already laid out massive and unprecedented economic stimulus packages to keep their respective economies afloat amidst the current global health crisis.
Regional and global financial institutions have already laid out their respective economic projections for 2020, and it would be an understatement to say that countries around the world would have negative growth trajectories.
To prove the point further, even the International Monetary Fund (IMF) admitted that the global economy has now entered a recession that is at least on par with the 2009 world financial meltdown.
What happens next?
With the novel coronavirus pandemic slated to continue until a proper and reliable treatment regime is found, economies around the world would need lots of help from their respective governments.
One of the biggest concerns regarding the global economic environment today is the fact that among the long-lasting impacts of a sudden worldwide financial recession include the risk of endless waves of bankruptcies and layoffs.
In immediate terms, these bankruptcies will not just lead to a decrease in the recovery rate, but at the same time tend to threaten to erode the fabric of societies worldwide as they have to face increasing levels of unemployment and decreasing amounts of domestic consumption.
Featured image courtesy of Kia.