How Has Coronavirus (COVID-19) Impacted The World Economy?
The pandemic that originated from the small city of Wuhan in China has now engulfed the entire globe in its misery. The entire world is now in shackles over this new type of virus; a disease that the humankind, even after pioneering in medical technology, has no solution for. As a matter of fact, COVID-19 has a major setback on the whole world, putting us decades behind what we were just a few months ago.
The end of this pandemic will see not just a loss of life but a loss of progress, a loss of advancement. The economy is currently unstable and continues to plummet down a rabbit hole. As massive and heart-breaking as it may be, the loss of lives can still be counted, as opposed to the other, much bigger crisis that the whole world is facing currently and will face in the foreseeable future too, can’t be explained in words.
The Numerous Ways in Which Coronavirus Will Impact World Economy:-
Two-thirds of the world’s population living in developing countries is faced with unprecedented economic damage. Economy is a chain originated through businessmen, run by them, governed by them and ruled by them to circulate money in the market, for fulfilling needs of every sector and strata of the country. According to the UNCTAD analysis, commodity-rich exporting countries will face a $2-$3 trillion drop in investments from overseas investors in the next two years. So, we are seeing and suffering the current impact of it but it’s actual impact is far bitter. The world economy will go into recession this year with a predicted loss of global income in trillions of dollars which is a very huge amount of money. This will spell serious trouble for developing countries.
The spread of Coronavirus has left businesses around the world in a position where they can’t run their business but still have to bear the cost for running a business in the form of salaries and other overheads. It seems as if the time is going back or it is repeating the phase of recession. In fact the United Nations Trade Report has stated that, owing to this pandemic, the entire world will go under a huge recession except India and China. An economy is run by businesses, they give employment and families are run through their salaries, take loans from banks which further helps to allocate money down in the market through it, purchase goods or other services and this way the whole chain works to circulate money in economy and the whole economy depends on their smooth functioning.
Globally big shifts in stock markets have been registered which is bound to leave a tremendous impact on many investments in pensions and savings accounts. The Dow and the FTSE recently saw their biggest one day declines since 1987. Investors fear this pace of spread will destroy economic growth and that government action may not be enough to stop this decline. In fact, central banks in many countries, including the United Kingdom, have slashed their interest rates which will make borrowing cheaper and encourage spending to boost the economy. Global markets did also recover some ground after the US Senate passed a $2 trillion (£1.7tn) coronavirus aid bill to help workers and businesses. But some analysts have warned that they could be volatile until the pandemic is contained. U.S had seen its worst phase and touched the highest rate of unemployment in decades.
The world aviation industry has also gone under huge losses as travelling to the affected countries is almost banned due which the whole industry is facing crisis as it will not only impact their current income but for the coming future too people will avoid travelling to those countries for sometime and their flights and staff will remain workless. All this is again a burden on the employer due to which they will cut down their staff and hence unintentionally boosting the recession, already prevalent.
Lesser flights means lesser consumption of fuel to which lockdowns further depleted the demand, gravely impacting the Oil Industry. Oil prices have slumped to those not seen since June 2001 due to the slashed demand.
On a more positive note, supermarkets and online delivery services have reported a huge growth in demand as customers stockpile goods such as toilet paper, sanitizers, rice and orange juice, milk powder etc. as the pandemic escalates. But, just like every coin has two sides, this too has had a negative impact, i.e, the price hike in daily routine items as the demand has increased. The lockdown has merely acted as in giving a boost to this frenzy. Strict lockdown, bringing a total halt to major industrial production chains further impacted the price of those goods.
The tourism and hotel industry are also going through a very bad phase; an industry which was supposed to reach its peak time due to school and college vacations, will now witness its highest downfall. The regular tourism within the affected countries is zero due to lockdowns and fear of the virus spreading which has stopped the chain of circulation of money to all those related to the industry and in return caused a blockage in the flow of cash too.
China makes up a third of manufacturing globally, and is the world's largest exporter of goods. It’s sale has gone down to 13.5% in just the first two months of 2020. Restrictions have affected the supply chains of big companies such as industrial equipment manufacturer JCB and carmaker Nissan. Shops and car dealerships have all reported a fall in demand. Carmakers like Tesla or Geely are now selling cars online as customers stay away from showrooms. When a crisis hits, investors often choose less risky investments like ‘Gold’. But even the price of gold tumbled briefly in March, as investors were fearful about a global recession.
In essence, one thing that is evident form the foregoing discussion is that every single business, big or small, is facing problems due to COVID-19 and is bound to face it’s long term impact too, resulting in the loss of wealth and health, both.
If the economy is growing, that generally means more wealth and more jobs. This growth is measured by looking at the percentage change in the Gross Domestic Product(GDP), or the value of goods and services produced, typically over three months or a year. The world's economy could grow at its slowest rate since 2009 this year due to the coronavirus outbreak. Even though various governments are taking major steps to help their citizens by reforming their policies and introducing new aids in this difficult time, the impact this tragic pandemic has made and is making over the whole world is not easy to repair and will take lot of time and tireless efforts to get it back to where we were.