Tag: Pandemic Economy

Since its emergence in 2020, the Coronavirus disease has spread to 185 nations and countries, with a total of more than 2.7 million people and more than 190,000 deaths. To contain the spread of the virus, governments around the world have taken steps to isolate countries and cities to varying degrees such as the closing of borders, shutting down of schools and offices, and restricting business operations. With these measures, the coronavirus has devastated the worldwide economy and has crippled much of international economic activity, hurting businesses and putting people out of work, as detailed below.

Rising Unemployment

Many economists have warned that lockdown measures around the world will accelerate job losses, which is already evident in unemployment figures in several economies. In the United States, the world’s largest economy, more than 26 million jobs have been lost in the past five weeks. According to the Bureau of Labor Statistics, the country’s unemployment rate of 4.4% in March was the highest since August 2017. The United States is not the only country grappling with rising unemployment. Australia and South Korea also registered an uptick in unemployment rates, with some economists warning that the situation could become worse.

Deteriorating Services Industry

The services sector is an important source of jobs and growth for many countries, including the U.S. and China, which are among the largest markets and consumers in the world. However, both countries saw sharp declines in retail sales as shutdowns forced many stores to close during the pandemic and kept customers at home. Economists have warned that shoppers may not resume spending after the shutdown measures are lifted. This is evidenced by the “slow improvement” in retail sales in China, even after the country allowed stores to slowly reopen.

Production Slump

Manufacturers, squeezed by the U.S.-China trade war over the past two decades, have been under renewed stress as the coronavirus spreads across the globe. The Covid 19 pandemic has hit manufacturers in China who rely on the Asian financial giant’s factories for parts and materials – also known as “intermediates” – to make their respective products. As more countries impose closure measures, more manufacturing plants have been affected. Some have been forced to close temporarily, while others that have remained open have faced restrictions on the supply of intermediates and materials.

Shrinking International Market

The impact of the coronavirus pandemic on the economy has led many institutions to publish their predictions for the international market. The International Monetary Fund, whose market assessment is widely followed, predicts that the global market will shrink by 3 percent per year. Only a few markets – for example, China and India – are expected to increase in 2020. Although the fund called for a 5.8 percent increase next year, it explained that the recovery is only partial, as the level of economic activity is expected to remain below what predicted in 2021 until the virus hits. The cumulative loss in global GDP more than 2020 and 2021 in the pandemic catastrophe could be about $9 trillion, greater than the savings of Japan and Germany, combined.…