Coronavirus & World Economy

Economic Effects of COVID-19 outbreak on the World Economy

The economic effects of the Coronavirus outbreak on the World Economy are huge. For the first time, the world economy enmasse screeched to halt. Almost every country affected by coronavirus and imposed lockdown following the guideline of WHO, to withstand the pandemic effect of the coronavirus. This step has scuttled the advance of coronavirus to some extent, but the world economy has to bear the brunt. The economic growth of most of the developed nations of the world followed a downward crescendo. The GDP growth was in complete doldrum during the Covid19 pandemic time. The developing countries are the worst affected by the pandemic nature of coronavirus. Loss of humans, coupled with a desultory economy, unemployment makes retrieval a distant dream.

A couple of countries like China and India were already on the path of economic recovery. But the same can not be true for the rest of the nations of the world. USA, UK, Spain, Italy, Brazil, Russia some of the worst affected nations of Covid19 pandemic. The world economy will take at least 2-3 years to return to the original form. Share markets of most of the nations are in doldrum, which has a disastrous impact on pensions and saving accounts of individuals.

How the pandemic has changed the world economy

Central banks of most of the nations slashed the interest rate. According to the IMF global economic contraction is hovering around 4.4% in the financial year of 2020. China remains unaffected by the economic slowdown and GDP growth was 2.3 per cent. Agriculture is the backbone of many developing and emerging economies of the world. The price of various economic elements was reduced by 20 per cent. Only Sub-Saharan countries were less affected by the pandemic disease. Industrial sectors of various developed and developing countries were affected by coronavirus and witnessed a disastrous slump, as work from home and lockdown were prevalent in most of the countries. Almost 93 countries were at the receiving end due to low industrial production. There are a couple of countries registered with positive industrial growth during the pandemic. Senegal (9%), Canada (7%), Singapore (4%) were completely unscathed by the pandemic impact of the coronavirus and industrial productions showed positive growth. Industrial production trade was also affected by coronavirus generated lockdown. India, Mexico, Italy and Spain were among the affected countries where trade losses are huge. China, Israel and Chile showed positive growth during the torrid time. Due to the covid19 pandemic, USA would be replaced by China as the numero uno economy of the world.

The Covid19 impacts economy of all the continent of the world. The effects on the economy were varied from one continent to another. During 90's Asia was the fertile ground for few emerging economies i.e. China, Singapore, Hong Kong, Malaysia, Indonesia, South Korea, Vietnam. Now China, Japan are the second and third-largest economy in the world. South Korea, Singapore are the developed countries of the world. Covid19 casts a shadow on the Asian economy too. The economy experiences a slight contraction of 0.8%.  Singapore, Vietnam, South Korea, China, Taiwan successfully muzzled the Covid19 pandemic's impact with a concrete strategy. Only India received a major jolt due to the viral effect of coronavirus and GDP shows a negative growth of 23 per cent in  August 2020.

Economic Consequences of the COVID-19 Outbreak

Coronavirus has a huge impact on the European Union, the second-largest economy of the world, which contains 19% GDP of the world. According to IMF, the European economy suffered a major shrinkage of 7.1% during 2020. The annual GDP was reduced by 10 per cent. Unemployment in Spain (14.1%), Italy (10%), Greece (17.3%) reached an all-time high.

Latin American economy was suffered a huge setback due to the Covid19 pandemic, experienced a contraction of 8.1% due to the widespread of coronavirus. Before the advent of Covid19 pandemic economy registered a growth of 1.8 per cent. IMF predicted an economic bounce back by the region in 2021. Countries like Brazil, Mexico, Chile, Colombia, Peru will register their economic growth in the current year, but the same would not be applicable for Caribbean countries.

Economic effects of COVID-19 pandemic on the World Economy is massive. Unemployment figures soared to 36 million in the USA, experiencing the most disastrous economic slump of the century. Most of the developed countries announced stimulus packages to boost economic growth. The USA announced a stimulus package which is 13% of the GDP, while Japan's rolled out support package which is 21% of GDP. Italy and Spain account for 5.7% and 7.3% of GDP. There is a silver line on the horizon. A couple of pharmaceutical companies already developed vaccines. Most of the affected nations already flattened the increasing curve of coronavirus. Now the world economy is in recovery mode. The IMF needs to chalk out a long term strategy to recover the world economy from the disastrous slump.

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