The COVID-19 pandemic had a far-reaching impact on people beyond just the spread of the disease and massive deaths. The pandemic has also caused the largest global recession in history as more than one-third of the worldwide population is kept under lockdown. The global stock markets fell on 24 February 2020 due to a significant increase in the number of coronavirus patients outside mainland China. Within the next four days, the stock markets saw their largest single-week decline since the 2008 financial crisis. The global stock markets crashed in March 2020 with a decline in several of the world’s major indices. As the manufacturing units were shut due to lockdown, panic buying resulted in supply shortages and price gouging. The International Labour Organisation estimates that about 400 million full-time jobs were lost between April and June 2020.
In the most recent reports, the World Bank has predicted that the global economy will shrink by 5.2% in 2020. The U.S. Bureau of Labor Statistics also released the worst monthly unemployment figures that the agency had reported in the last 72 years. Similarly, the Bank of England has also warned that the United Kingdom will have to face the steepest output decline since 1706. The India Ratings and Research also show that the country’s economy will contract 11.8% on the year in the current fiscal year, which began in April 2020. All these estimates come while the cases of coronavirus keep increasing globally, and the suggested vaccines are still in the process of final confirmation.
Estimates with a pang of uncertainty
All the predictions in such an environment comprise huge uncertainties, but three main indicators suggest that recovery from this downfall can take a long time. Firstly, due to border closures and state lockdowns, the global demand for goods has contracted and has affected the export-dependent economies greatly. Already the global trade growth had decreased by half between 2008 and 2018 as compared to the previous decade. US President Donald Trump had also launched the US-Chinese trade war in the middle of 2018. Alongside this, the prices of many exports have also dramatically fallen with its huge impact on the oil market. The second indicator is the large-scale global unemployment. Some shuttered businesses are least expected to reopen. The third important factor is that the economy within the countries and across countries has mostly been affected, with small-scale businesses worst hit.
Different countries have adopted different coping mechanisms to stay afloat amidst this coronavirus depression. Many advanced countries have rolled out support packages for the citizens like India has announced economic stimulus package as 10% of its GDP, Japan has 21.1% US (13%), Sweden (12%), Germany (10.7%), France (9.3%), Spain (7.3%), and Italy (5.7%). The Central banks are also trying to stimulate the failing global economy. The interest rates are at historic lows in major countries across the world. The Reserve Banks of the countries are also trying their best, as The U.S. Federal Reserve tried to double the amount injected into the economy in less than two months and put the required reserve ratio at zero. All efforts are being put to recovery, but so far, the coronavirus depression is overpowering the global forces.
Conclusion by The Policy Times
- The first step to deal with this problem is by addressing that we are in the midst of a depression. Countries like India are completely disregarding their global stance, with the media hiding crucial facts from the citizens.
- Attempts to recover the economy should not overshadow the efforts to contain the coronavirus in the first place.
- Countries with poor public health infrastructure should invest more in their health sector so that the disease can be controlled, and the economy will uplift itself.