COVID-19: The Impact on Global Economy

Ever since the pandemic Coronavirus broke out, it caused a huge problem worldwide. Coronavirus outbreak surely proved to be a significant problem around the world. Why? Because it seemed to take down the global economy and that too on a full scale. The highest-ranking global economic powers suffered a huge recession. While many traders profited from it, the going down of the worldwide economy was surely a problem for the leading countries.

According to the reports by the UN Department of Economic and Social Affairs (DESA), the pandemic led to a massive disruption in the global international trade and supply chain.

COVID-19 started in Wuhan province of China around November, and by January, it had affected some other countries. However, the situation now has gone totally out of hands, with most of the countries being affected. The global power, America, is now at Stage 5, with more than 2 Lakh patients being affected.

The crisis that is to hit the world in 2020 is as bad as that of 2009. In 2009, the global economy went down by 1.7 percent, but in today's time, it is being expected that the world economy could go down by 0.9 percent. The countries across the world are trying their best to fight against the global crisis, which is leading them to lose out on economical packages. One of the most important aspects to consider is that due to the global downfall of the economy, many people are on the verge of losing their jobs, as per DESA.

The daily wagers across the world have already lost their jobs due to shutdown. With each passing day, DESA is expecting that the government, too, may fail to provide financial support to boost the economy. This time is surely terrible for business startups because, with each passing day, a new problem is arising, which may turn out to be a considerable crisis later on.

According to the Economic Reports of 2020 before the coronavirus outbreak, it was being expected that the global economy could boost by 2.5 percent itself. If the pandemic doesn't get solved too, the expected contraction may increase, leading to far worse scenarios for the world to face on an economic basis.

What affects the economy?

How much the world would face will largely depend on two things:

  1. How would long people be restricted from the movement?
  2. The actual size at which the countries are responding to combat the crisis.

The pandemic has severely hit North America and Europe. The industrial sectors, such as leisure, tourism, hospitality, retail trade, and transportation around these countries, are majorly impacted. It is being expected that more than a quarter of people related to these industries will lose their job.

With businesses losing revenue, it is very evident that the employees will lose their job. The deep economic recession is to hit many countries around the world. UN-DESA, is, however, joining hands to fight the global crisis and save the society from submerging into economic ruin. Everyone is trying to sustain economic growth and enhance financial stability.

The economic ruin of the developed countries will also impact the economic condition of developing countries due to trade and consumer goods. The European Union and the US will soon restrict imports from developing countries. This might also lead to a restriction on global manufacturing production. The tourism sector is expected to be impacted the most.

There might also be an increase in debt of distress for the businesses owing to limited commodity-related revenues and reversal of capital flow. The government of different countries may, however, be forced to check on the public expenditure if they need to support the investment and consumption capacity.

UN-DESA states the economic recession is only leading to the population becoming more and more vulnerable. While the rich may be affected, it is the poor and daily wagers which are expected to suffer the most.

With the death toll reaching close to 50,000 people around the world, it is being expected that the scale may rise too. You never know how long the impact of COVID-19 is going to last.

China and India are less likely to get into recession

While it is expected the whole world will go into recession, the latest trade reports by the United Nations suggest that India and China won't be affected by the recession. The United Nations Conference on Trade and Development in the new analysis states that it may give out the $2.5 trillion rescue package for countries hit worst by the global recession.

In the next two years, these commodity-rich exporting countries will see a major drop in their investment of around $2-3 trillion. The complete details related to the UNCTAD package is yet to be released. Although it did suggest that India and China are less likely to enter recessions, the reasons, however, haven't been made clear.

The market research companies too have joined the fight against COVID-19 to ensure that they do not suffer due to the economic recession. Since most of the businesses are expected to go out of business, the market research industries are working towards saving the money and not undergo the recession.

In the coming times, it is expected that the financial gaping will rise due to the pandemic. The impact on the global economy due to COVID-19 has been worse, but if the situation doesn't improve in recent times, there is a high chance for the condition to worsen more. Advanced economies too will be prone to lose, but they may do 'whatever it takes' to solve the problem.

The hope still lies on the G-20 leaders, because if they stick to their promise of 'global response in the spirit of solidarity,' there are high chances that the condition around the developing countries will improve too.

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