Covid-19: The Pandemic’s Impact On Global Economy

The Covid-19 has taken the world’s economy upside down. It has officially been designated a pandemic by the World Health Organization (WHO). The virus has gone global worldwide impacting over 150 countries. The number of Covid-19 cases surpassed 12,000,000 globally. Over 7,000,000 of the infected patients have recovered, and over 500,000 fatalities have occurred so far. 

China’s active precautions and quarantine of millions of people in their hospitals and homes have slowed down the progression of the outbreak. However, the US, UK, Europe and other regions around the globe continues to evolve rapidly. 

Markets and businesses have been a victim of it since the beginning. How long will this pandemic last and what impacts will it create to the markets and economy is hard to predict. One sure thing is that this contagious disease is not lasting any soon. What does this pandemic mean to the global economy and businesses? Read this article to have a clear insight into how the organizations and the global economy are struggling during this outbreak.

Impact of Pandemic Thus Far:

Many countries are facing a recession in 2020. People all over the world want to see the virus contained. The economic harm represents the largest economic shock the world has faced in decades and is evident to many businesses and industries. A significant number of employees working in the corporate and industrial sector had to switch to remote working. 

A Great Recession:

The deep recessions of the Covid-19 outbreak have left lasting scars as a whole. There is a huge shift in the stock market, leaving the investors in fear. The forecast for Global Economic Prospects (GDP) of 2020 envisions a 5.2 % contraction in the global GDP of 2020. Despite the extraordinary measures of governments to counter the turn-down in the economy, it is said to be the deepest recession in decades. 

For the developing countries and emerging market, the crisis has made it difficult to strengthen and stable the public systems, including health and industrial sectors. It has highlighted an urgent need for the protection of the vulnerable population. The economy of the developing countries is impacted by different quarters. The highest pressure has been on the healthcare systems. There is also a loss of trade and tourism, fluctuation in capital flows, flux in shares and stock market, and tight financial conditions. The demand for the supply of commodities has tumbled due to the trade and supply chain restrictions. According to the International Monetary Fund (IMF), the economy is expected to shrink by 3% due to the outbreak of this infectious disease. 

Brink of Unemployment:

The pandemic has led unemployment to its peak as many businesses went bankrupt. Majority of the workers have lost their job. And those who haven’t, are experiencing a major cut down in their salaries. According to a report of the IMF, the United States alone has faced a hit of 10.4 % of people out of work. 

Many of the employees across several industries have switched to remote working, and many are facing difficulties to adapt to this new culture. However, there are some bright areas—sectors such as health standstill in under lock-down. The demand for medical equipment, especially face masks and test kits, have increased dramatically.

On the other hand, Starbucks has reopened most of its locations. Apple CEO Tim Cook has also shown optimism as its Chinese supply chain is rebounding.

Travel Among the Top Victim:

The travel industry has hit badly and faced major damage. Many airlines had to cut their flights and customers have cancelled business trips and vacations. Business events, meetings, and trade shows have also been cancelled across the globe. The United States Airline has alone decided to cancel 10% of its domestic flights and 20% of its international flights. 

But as the spread of this global pandemic has eased in some areas, the travel industry has started to continue its flights in different regions slowly.

A Collapse in Oil Demand:

Another victim of the current situation is the oil industry. The industry has experienced a historic collapse in oil prices and demand. The prices of crude oil have already begun to tail down. All the other industries linked with the oil producers are facing a huge financial instability in their businesses.

However, the oil supply has regained its momentum as the transport and travel restrictions have eased in some countries. But even after the oil demand recovers, it is sure to exacerbate many businesses, especially the energy exporters. 

The Future of Markets and Economy:

While people around the world remain quarantined and follow social distancing, the number of those infected continues to increase aggressively. In the face of this disastrous outlook, adopting certain strategies that benefit from volatility should be the immediate priority for policymakers as the governments are expected to face more economic pain in the longer run. Governments must make sound decisions as the outcome of Covid-19 is uncertain. 

The key to uplift the global economy is to employ strategies that can still make money in volatile markets regardless of which direction they move into. With all the global corporation and coordination, economists still expect a hard hit to the global economy. One major reason behind this is because the timing of a subsequent recovery from the pandemic remains uncertain. 

Besides this, the governments are in the hope of suitable vaccines and have pledged billions of dollars for the treatment options and a Covid-19 vaccine. A large number of pharmaceutical companies are already in the race to develop a potential vaccine and drugs to bring back the nations and economy to normal. 

The above information is a little insight into what is happening around the globe and what impacts Covid-19 has caused to the global economy. That being said, all we can do is take precautionary measures and decisions to protect the economy and markets from the downfall due to this contagious outbreak.