Essay Topic: Economic crisis due to covid 19
On March 11, 2020, the world was confirmed of a suspicion that had been slowly creeping up on her through the previous months. The World Health Organization declared the COVID-19 outbreak a pandemic, plunging the world into the depths of hitherto unforeseen distress. As nation under nation went into rapid, indefinite lockdowns within the ensuing few weeks, global economy dipped into an all-time low with little clue of any steps of recovery.
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NOT JUST A HEALTHCARE PROBLEM
As healthcare frameworks around the world staggered and teetered on the threshold of collapse as the pandemic hit at full force, one thing became abundantly clear: COVID-19 is far more than a health crisis; it is an economic and social crisis the likes of which the world has never seen before. While the magnitude of impact has varied greatly among nations, with the less developed countries facing the worst, not a single nation has gone unscathed.
Consequently, not a single industry has escaped this unprecedented blow. Countries around the world imposed and extended lockdown and social distancing norms, forcing non-essential businesses to pull their shutters. Closed borders imposed complete restriction on trade and travel. The hospitality industry turned into a ghost town as people were forced inside their own homes. And even as governments try to mitigate the impact by handing out monetary benefits, the pandemic is expected to leave deep wounds caused by loss of livelihood and fragmentation of education and trade. In 2020, the global GDP faced the deepest recession in decades. The emerging markets and developing nations have faced the compounded blow of an inadequate healthcare system, loss of lives and livelihood, and increasing debt.
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THE IMPACT IN NUMBERS
· DOWNTURN IN GDP
o According to the International Monetary Fund, global economy shrunk in 2020 by 4.4%. This marks the worst fall since the Great Depression.
o Large economies reliant on services have taken a major hit, such as Italy and the UK, facing a downturn of 9% and 7% respectively. And they are not alone in this crisis; all major economies have, in fact, taken the toll: USA and Canada are down by 6%, Japan by 5%, and Germany and France are down by 8%.
o China was the only major economy to register a growth by end of 2020 at a 2.3% increase in GDP.
· EMPLOYMENT WOES
2020 was a grim year for jobseekers and professionals alike.
· Major economies saw a sharp increase in rates of unemployment as vacancies dropped and companies downsized. USA registered an 8.9% yearly unemployment rate, while Canada jumped to 9.7%.
· In most nations, postings for new vacancies registered a nearly 30-60% drop by the middle of 2020, but slowly gained momentum toward the later part of the year. The only notable exception was Japan, whose unemployment rates dropped steadily.
· DEATH TO HOSPITALITY
The tourism and hospitality industries across the world have taken a major hit, and are unlikely to recover very soon even after borders have opened.
o Globally, commercial flights dipped well below average, registering less then 60k flight across 7 days even after travel restrictions loosened up. Matters were made worse by discovery of new strains of the virus, forcing countries to impose stricter travel restrictions.
o The tourism industry faced complete shutdown for several months. Even after bans were eased, the general population proved unwilling to travel to far-off locations for fear of the virus.
o Top destinations like Italy, France, Indonesia, Brazil, Greece, Thailand and Spain registered a nearly 100% decrease in hotel and rental reservations till the end of 2020.
o It is expected that this trend will continue, and pre-pandemic levels of bookings will likely return post 2025.
· GOOD NEWS FOR PHARMA
Not surprisingly, the pharmaceutical industry has raked in profits during the pandemic. As governments across the world pumped funds into research for a cure or a vaccine, drug companies have seen their share prices increase dramatically. Moderna was the clear winner in this race, recording a growth of a 1000% in 2020.
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WHAT’S THE FUTURE?
According to Gita Gopinath, Chief Economist of the IMF, global GDP could be down by $9 trillion by 2022 due to the pandemic.
Experts fear that the effects of the coronavirus pandemic will last years, if not decades. Growth downgrades are likely to continue, with the developing nations being the slowest. Low income countries, struggling to contain cases and treat the infected, might be facing a very long period of economic rcession spurred along by a severe lack of labour force.
The UNDP predicts that even with the arrival of the vaccine, the toll of the last nearly 12 months of living with the virus will be felt for years to come. In this interconnected world, impact on any nation will be felt far and wide. Urgent and appropriate response to the crisis on a global level is imperative to cut losses and ensure that the suffering of each and every economic stratum is minimized.