COVID-19: Impact on Global Economy & 2021 Projections - Essay Sample

Introduction

The article's main focus is on the impact of COVID-19 on the global economy. The report gives insights on the various effects of the novel coronavirus that has had on the global economic progress from the beginning of January 2020. It has given the multiple projections on the economic resurgence as with the development of time. The article is basing its prediction on the vitality of the economy in 2021, basing on the possibility of declining numbers of the reported COVID-19 cases globally.

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The article explains that the anticipated global economic growth rate for 2020 was 4.9%. Still, due to the COVID-19 impacts on the economy, the globally has seen the World Economic Outlook focus on recording a figure of the economic growth almost 1.9% lower than expected. Among the major factor highlighted in the article that has contributed to the surge in the economy is the lockdown in most countries to curb the spread of the disease. The article also gives insights to the nations whose COVID-19 reported cases have been on the decline to set aside funds for the healthcare sector to ensure that the countries are prepared to counter any future increment of numbers.

The countries that are slowly reopening their economies should not focus much on reviving the sectors that have shown little appreciation in growth but focus on the industries that rapidly respond to the economic stimulus. Countries struggling with both the COVID-19 pandemic and the financial crisis could consider outsourcing funds by seeking credit to revive their economy. How all countries of the world should implement strategies in ensuring that the health services are effective, the need of the nations to fund research and policy of delivering relief commodities to the needy in the society have also been highlighted in the article. Also, it has highlighted ways in which the legislators enforce the climate mitigation strategy. The article explains how there was a significant drop in the emissions of greenhouse gas during the COVID-19 pandemic.

What is the author’s thesis

The author's main focus is on the economic resurgence during and after the COVID-19 pandemic. The author vividly explains the impact of the novel coronavirus on the world’s economy. They have demonstrated the various effects of COVID-19 in the marketplace and highlighted the examples of how the pandemic has affected the economy. The explanation of the multiple ways in how the economy has been affected by COVID-19 including the weakening of inflation levels globally, where the inflation levels have dropped significantly by around 1.3%, the decline of mobility levels. The other impact of Covid-19 on the economy for the first quarter of 2020 is global trade contraction. The trade contracted up to 3.5%. Also, COVID-19 pandemic had a great impact on the labor force market. Due to the nature of the disease, laborers lost their jobs in the first quarter of the years. In the second quarter of the year, two and a half times more individuals lost their jobs in the process.

What support is offered to support this thesis

The available economic data from the WEO forecasts show a continuous decline in global economic activities caused by the COVID-19 pandemic. Developing countries and emerging markets have been hit hard with total lockdowns that have halted operations. The rate of infections and deaths from the pandemic has reduced due to lockdowns in developed countries. In the first quarter, the Growth Domestic Product was worse than expected because many countries were forced to extend lockdowns except a few like China that has managed to resume total operation.

The measures outlined by the government health agencies in these countries, such as social distancing and restricted movements, affected the consumption rate in markets. Many households have experienced loss in a steady income flow as jobs due to loss of jobs as the pandemic persists. Individuals are forced to eat into their savings, and firms have cut down on the investment rate due to uncertainty in the future. The demand for goods and services has gone low, and the supply for commodities as been interrupted because of restricted movements as a measure to curb the spread of the virus.

According to the International Labor Organization, companies worldwide have reduced working hours and send several of their staff on compulsory leave. In contrast, others have invented a work-at-home strategy to reduce spending. The low skilled workers in the labor market are greatly affected by these regulations because they do not have the option of working from home. The lockdowns necessitated a breakdown in cross border tourism, and stringent requirements among the need for one to pass as a supplier made things worse. Truck drivers that play a pivotal role in the cross-border supply of goods were greatly affected. The mandatory requirement for a COVID-19 compliance certificate at border points in every country-restricted movements since testing is costly and takes time to return the results.

A few measures put up by several governments, such as reduced working hours, and working in shifts, limited the risks of many households facing total unemployment. Regulatory actions and financial support that has ensured continuous provision of credit have prevented individuals and companies from becoming bankrupt. According to the Fiscal Monitor in June, about $11 trillion in fiscal measures have been extended worldwide. Major central banks have limited the rising borrowing costs and improved liquidity provision to keep firms and individuals on their feet. The shortage of dollar liquidity that posed a great threat and that could have enhanced the rate of inflation is contained by the swap lines between central banks in emerging markets. The actions of financial regulators have enabled strengthening for firms with a strong credit rating. These actions include changes in terms of bank loan repayments, liquidity buffers, and capital release.

Conclusion

The COVID-19 pandemic brought ham and disrupted operations across the globe. As a result, global governments put up measures that would enable containment of the pandemic that had far-reaching implications on the economy and the labor market. The government measures interrupted a hope for economic resurgent across the globe. However, financial regulators put up measures to curb the increase in inflation, such as changes in loan repayment terms and more room for lenders to offer loans to customers with a good repayment history. Central Governments across the globe have extended aid to individuals and firms to keep them a float from the pandemic. Philanthropists have played their part in supporting low economies by donating medical equipment and funds to emerging economies. Markets across the globe will strengthen as the rate of infections reduce due to movement and social distance regulations.