How Has the Global Economy Been Impacted by COVID-19?
The coronavirus pandemic continues to have an enormous impact all over the world causing significant damage to the global economy and causing many nations to slip into a recession. The outbreak was first detected in China and has since spread to 188 countries with many now experiencing a second wave of the virus in the winter months leading some major nations to reintroduce lockdown measures.
The Stock Market
Governments have been left scrambling trying to contain the spread of the virus by implementing lockdowns and restrictions which have had severe repercussions on national economies and the global economy as a whole. There have been huge drops in the stock market with The Dow and FTSE seeing their biggest quarterly drops in the first three months of the year since 1987. It will be important to keep an eye on the stock index going forward as this can be a good barometer to see the health of both industries and nations.
The global economic forecast is grim reading with the UN’s trade and development agency projecting that the virus will end up costing the global economy a staggering $1.1 trillion in 2020. The IMF states that the global economy will shrink by 3% this year which it has described as the worst decline since the Great Depression of the 1930s.
Heavy Hit Industries
Industries across the board have been heavily affected and it is unclear what the recovery will look like, especially with concerns over the second wave in winter, the sharp rise in unemployment and vaccines not yet approved for usage. Trade shipments have been hit heavily with the port of LA reporting a drop of 25% in container volume while the price of oil barrels has plummeted from $65 to just $20.
Obviously, travel and tourism has been one of the hardest-hit areas with a significant drop in flights due to travel restrictions, especially in Italy, Spain and the USA. The airline industry forecasts a $29 billion drop in revenue with several airlines going into administration, such as Flybe. Additionally, the loss of Chinese visitors to Indonesia has cost the travel board as much as $1.5 billion.
China’s Recovery & Vaccine Hope
The loss of activity is a real cause for concern with further economic damage set to follow on a global scale. China has started to bounce back which is positive to see and there is reason to be optimistic for a vaccine in 2021, but it will be a long road back even once the threat of the virus has passed.
2020 has been a devastating year for the world in more ways than one and the global economy has been hit heavily as a result of the pandemic. This will continue heading into 2021 with many nations now struggling to get control of the virus and implementing lockdown measures once again.