By Christiana Ioannou
On the 11th of March, human beings woke up to the grim reality when World Health Organization declared the Covid-19 a pandemic. Following the report of corona’s first case, the virus is transmitted in the whole world. The horrific and alarming speed at which the coronavirus has spread worldwide infected millions of people and brought the economy to its knees. The panic and fear of contracting the disease forced the countries to impose strict lockdown, halting all kinds of economic activities.
Many vaccines have developed, but still economic future and solutions are uncertain. The quick outbreak of the disease has posed a difficult challenge for the policymakers who have given many possible scenarios to revive the economy but still, the global economic future is uncertain. Covid19 left behind the World War 2 and 1923 recession and has disturbed the supply and demand in this world of interconnected trade. The globalized economy received a severe setback with a nationalist focus of countries and competition over limited resources. In terms of supply, the infections decrease labor supply and productivity, travel restriction, business closure, and social distancing disrupt the supply chain. Demand also decreased from the consumer’s side because of unemployment, inflation. The reduction in household consumption and investment adversely affected the demand for products and services.
Though the modern world of the 21st century is quite different and advanced from the world of 1920 when the Spanish flu broke out, still, the condition is much worse as compared to the past because now the trade is interconnected. Countries depend on each other for their economic progress and also worldwide traveling is easier as compared to past.
Unemployment, inflation, poverty due to lockdown affected individuals of every field and sector. It is expected that this pandemic will push many countries into recession not witnessed by anyone since 1870. The developed economies are expected to shrink by 7 percent, and struggling economies will shrink by 2.5 percent along with coping with virus outbreaks. The impact of Covid-19 on poor or developing is severe and overwhelming. The pressure is being exerted on multiple sides like an imbalanced healthcare system, the loss of trade, reduction in tourism, mounting debt, strict financial conditions. After the closure of educational institutions, restaurants, offices, tourism places, and markets, the unemployment rate increased. Millions of people lost their jobs. New recruitment is delayed for an indefinite time period.
Almost all countries earn their big portion of revenue through agriculture. In agricultural countries where a large population’s livelihood depends on agriculture, any disruption in food supply or production can cause catastrophe for the people and economy. The pandemic delayed the transportation of many agricultural products. The delay caused scarcity and eventually price hiking.
The global stock market crash in March 2020 stunned the whole world, and the decrease in prices of crude oil because of the Russia-Saudi Arabia oil price war created a further gloomy situation. According to United Nations Development Programme, the developing countries will suffer a US$220 billion reduction in revenue. The organization predicts that the after-effects of Corona on the economy will persist for some years.
The manufacturing business has been closed since the pandemic due to low demand. According to a report, the USA has experienced a 40 % decline in new vehicle sales, and Germany is also facing a crisis after a decline in sales of electric cars.
The utmost need of the present situation is the cooperation and negotiation on the same table. Economic organizations like International Monetary Fund, World Economic forums can prove themselves useful in providing a guideline and financial assistance to the weaker economy and chalk out a plan of how to come out of this economic crisis without much delay.