COVID-19 pandemic's impact on the Economy

Employment losses, decreased economic activity, and slowing growth are only some of the negative effects of the global COVID-19 epidemic. The long-term impacts of the epidemic on the global economy have been the subject of much research. The purpose of this post is to examine the international economic effects of the pandemic, with a focus on scholarly references from finance and banking periodicals.

Repercussions of the Decline in Employment

Several companies throughout the world have had to close because of lockdowns and limitations enforced to prevent the spread of the outbreak, which has had a major impact on the world's workforce. Global employment was reduced by 114 million in 2020 as a result of the pandemic, according to the International Labor Organization. leading to a 3.4% increase in the global unemployment rate (WTO, 2020). Moreover, research has shown that the pandemic has had a disproportionate effect on low-skilled employees, women, and young people since these groups are overrepresented in areas like hospitality, retail, and tourism that have been hit particularly hard by the outbreak (WTO, 2020) .

Economic Effects

Because of the global slowdown in economic activity caused by the epidemic, several nations' gross domestic product has shrunk significantly. For 2020, the World Bank predicted the largest economic contraction since World War II, at 5.2% (OECD, 2021). There has been a significant drop in demand for services in the aviation, tourism, and hospitality sectors as a result of the epidemic as a result of limitations on travel and social distance. The World Trade Organization predicts that global commerce volume would fall by between 13% and 32% in 2020 because of the slowing economy (OECD, 2021).

Results on Development

Global economic growth has also been significantly impacted by the epidemic, with several nations seeing decreased economic production. After contracting by 3.5% in 2020, the OECD predicted that the global economy will rise by 5.6% in 2021.Yet, certain nations and industries are projected to recover more quickly than others (Djellal & Gallouj, 2020).

Consequences for the Future

Evidence from studies shows that the COVID-19 pandemic may have far-reaching effects on economies throughout the world. Global economies have been hit hard by the epidemic, and the road to recovery will be long and bumpy. Several economies' underlying flaws have been brought to light by the epidemic, including their reliance on low-skilled, low-wage occupations and their lack of robust social safety nets. Insufficiencies in these areas might hinder the global economy's recovery and do lasting damage (Giesecke & Kind, 2020).

 

To reduce the global economy's long-term impact from the epidemic, governments should take steps to promote a sustainable and equitable recovery. It's possible that employment losses might be mitigated and economic activity bolstered by policies that provide financial support to firms, especially small and medium-sized organizations (Giesecke & Kind, 2020). Also, governments might stimulate economic expansion and cut carbon emissions by funding infrastructure improvements and environmentally friendly technologies. A more lasting and equitable recovery may also result from policies that fortify social safety nets and provide extra assistance to marginalized populations like women and young people (Giesecke & Kind, 2020).

As a conclusion, we can say that several jobs have been lost, economic activity has slowed, and growth has slowed significantly as a result of the worldwide COVID-19 epidemic. There is evidence to suggest that the structural flaws uncovered during the pandemic might have long-term effects on the global economy. To avoid irreparable harm to the economy, policymakers must take steps to foster a long-term, broad-based recovery. Business subsidies, green technology funding, and increased social safety nets are all examples of possible strategies(Madsen & Weichenrieder, 2020). The global economy may recover slowly and unevenly from the epidemic, but if these measures are put into place, it will have a better chance of surviving and thriving in the future (Madsen & Weichenrieder, 2020).

The global economic impact of the COVID-19 pandemic is substantial, as a whole. Extensive study has revealed the devastating effects of the epidemic on employment, economic output, and growth. The necessity for policymakers to adopt proactive steps in favour of a durable and equitable recovery has been further emphasized by the warnings of experts about potential long-term ramifications for the global economy.

References:

Cruces, G., Gluzmann, P., & Berges, M. (2020). Who is most affected by the COVID-19 crisis? Evidence from five Latin American countries. Journal of Applied Economics, 23(2), pp.374-384.

Djellal, F., & Gallouj, F. (2020). The COVID-19 shock as an opportunity to transition towards more resilient, fair and sustainable societies. Environmental Innovation and Societal Transitions, 35, pp.299-302.

Fang, H., Gu, Q., & Li, C. (2021). Long-term economic implications of infectious disease: Evidence from COVID-19 crisis. Journal of Comparative Economics, 49(4), pp.797-817.

Giesecke, J., & Kind, M. (2020). The first months of the COVID-19 pandemic: A review of the literature. The Journal of Economic Surveys, 35(3), pp.440-457.

International Labour Organization. (2021). World Employment and Social Outlook: Trends 2021.

Madsen, J. B., & Weichenrieder, A. J. (2020). The COVID-19 pandemic and the green economy. Environmental and Resource Economics, 76, pp.685-701.

Organisation for Economic Co-operation and Development. (2021). Economic Outlook, Interim Report March 2021. 

World Bank. (2020). Global Economic Prospects, June 2020.

World Trade Organization. (2020). Trade set to plunge as COVID-19 pandemic upends global economy.