Paper Example on COVID-19: Global Economic Crisis - Millions Infected, Businesses Counting Losses

The Covid-19 pandemic was first detected in China country, and throughout the months, it has infected millions of people in many countries across the world. Its spread has led many businesses all over the world, counting losses and costs and wondering how the recovery process will look like. Many people have lost their jobs or had their incomes slashed by specific percentages fur to the coronavirus crisis. Rates of unemployment have, therefore increased rapidly, leaving many economies at risk as they are unable to cope with the negative changes that have been realized in various countries. Experts and other medical personnel will eventually get a cure for the virus. Still, it could take years before employment levels, and the economies of multiple countries return to the level they were before the pandemic hit the world.

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Covid-19 is the enormous global shock in the past decades where hundreds of lives have been lost, and the economy of the world is likely to face the worst recession since 1930. The International Monetary Fund explains that global economies will shrink by 3% due to the pandemic in the next few months describing the decline as the worst since the 1930s when the Great Depression occurred. The resulting employment and income loss have caused a lot of damage to the economy, livelihoods, sustainable development and health services (Zhang, Hu and Ji 2).

Although the IMF said coronavirus had led the world into a crisis like never seen before, it expects that global growth will rise to 5.8% in case the pandemic fades in the months before 2020 comes to an end(Zhang, Hu and Ji 3). Developing and developed countries are expected to fall into a recession for the first time since the Great Depression. Growth in advanced economies will therefore not be able to get back to its previous states before the virus struck until 2022. The unemployment rates have increased to 4.8% in 2020 compared to 3.8% the past year(Zhang, Hu and Ji 4).

Companies in the services industry which were significant sources of growth to most economies across the world have experienced a lot of losses that have changed industries a lot. The travel industry is among the hardest hit in the marketplace. It has been severely damaged as airlines have cut flights and customers have cancelled holidays and business trips (Ozil and Arun 2). This comes as many countries introduced travel restrictions to contain the virus with data from flight-tracking service showing that fight numbers have taken a massive hit in the current year. Covid-19 will eventually leave a lasting negative impression on the economy because it has hit hard mainly for the youths, households with low incomes, temporary workers, as well as the self-employed. The World Trade Organization has forecasted that almost all regions in the world will suffer declines in the trade that will be in double digits.

Primary Sectors

The effects of the Coronavirus pandemic on the economy is divided into individual world aspects such as primary sectors, secondary sectors and tertiary sectors that have been hit the most and may take a long time to recover even after a cure or vaccine is found. The primary sectors include agriculture and extraction of petroleum & oil(Ozili and Arun 9). Agriculture has been one of the most affected sectors in the economy, mainly due to a global decline of the demand from restaurants and hotels, making the prices of agricultural commodities to drop tremendously.

Due to the protective measures that different countries have placed to regulate the spread of the virus such as self-isolation of people that come into contact with suspected cases of infected people, the number of delivery staff and available inspectors has been negatively impacted making it hard for transportation and verification of raw materials and finished goods(Ozili and Arun 9). The ability to exchange commodities has declined worldwide, with many markets shutting down trading. To recover from the waste and losses that the agriculture sector has experienced during the period of the Covid-19 pandemic, it will take a long time to recover depending on the dedication of the countries’ leaders and the resilience of the sector.

The other primary sector that has been affected the most by the Covid-19 disease is the petroleum and oil sector that has faced a steep crash never seen in the past 30 years. Countries such as Russia and Saudi Arabia, which are the leading producers of oil in the world have faced different adverse effects as the pandemic caused Russia to refuse any advances to slash production. At the same time, Saudi Arabia retaliated with considerable discounts to buyers(Ozili and Arun12). The increased provision of oil caused an oil-price war that has had great adverse implications on the global economy. Cheap oil, unlike other times when it would have been an advantage on world economies currently has negative effects as the savings on petrol are being used to curb the spread of the disease instead of development practices. The oil-producing countries have experienced losses that may take a long time to recover from, especially with the current spending of consumers.

Secondary Sectors

Covid-19 has created adverse effects on the manufacturing businesses around the world with many people anticipating a decline in turnover for the next two quarters. The pandemic has created negative impacts on business operations with visible negative importation issues and deficiencies of staffing as a result of disruptions in chains of supply as well as policies of self-isolation (Nicola et al. 185). The virus has disrupted the supply of goods globally, making it hard for firms in the United States and other countries to place and supply orders. Many workers have been sacked from production companies with the supply of products and labour decreasing each day. The increased lockdown of people has led to a decreased amount of labour hence demand for products and services has reduced drastically causing significant uncertainties in other economies. The virus has also created economic disruptions leading to the volatility of financial markets that cause risks to the security of the economy.

Governments have in turn been forced to support households which are vulnerable to poverty. The government also supports smaller businesses intending to reduce the shock that they will experience by the time the epidemic ends. The result of such circumstances is that restriction of movement of goods from one country to another will continue being implemented in many countries affecting economies that rely on each other for trade practices to happen (Nicola et al. 186). Financial markets will also experience low-interest rates leaving central banks with no protection against economic fallouts that are likely to occur as the pandemic continues to bite across various economies.

Recovering from economic fallouts will be a long process that will require a lot of effort and investment after the virus is contained. Many companies have been closed down, and millions of people lost their jobs due to the virus(Nicola et al. 186). It will take them time to get another job after the virus is over and continue paying taxes to facilitate the government’s activities, making it hard to run the operations of different countries. It might take years before such people get another job and become stable again; hence countries are bound to have substantial economic problems before they stabilize.

Tertiary Sectors

Covid-19 has affected the education system with all levels of education from preschool to tertiary education being negatively affected. Schools have experienced complete closure in countries across the world, with more than 900 million learners being affected by the closure of institutions of education(Nicola et al. 187). The closure of schools has had direct effects on economies with staff losing incomes after they are sacked from the schools or sent on unpaid leaves. Many parents have been forced to leave work so that they can take care of their children.

Healthcare workers who have children have also been forced to leave work to care for their children, and this has caused a decline in the delivery of healthcare services across the world. The healthcare hours lost due to such circumstances have negatively affected healthcare delivery, and this has harmed the economy as the health sector becomes more vulnerable (Nicola et al. 187). The governments had found it hard maintaining the health sector, especially hospitals, and it will experience hard times returning the industry to the position it was before the pandemic began.

The United States economy will affect other economies because it is among the top economies in the world. Depending on the years that the coronavirus will last, the negative effects that it will cause might surpass the impact of World War II or the economic recession of 2008 (Gramlich 1). The economy of America will take a month or two to recover if the epidemic is controlled in the next few months. However, if it takes a year or two to control the virus, the economy might take years or decades to recover because of the damage that it will have caused. Some of the adverse effects will be irreversible and will be impossible to recover from.

The downturn caused by coronavirus is likely to cause increased government debts in most countries worldwide. The projected shrink of the global economy this year is 3%, and it is expected to cause a fall of tax revenues as governments spend millions of dollars on measures of emergency reliefs to ensure that they contain the damage that will be incurred by the end of the pandemic (Gramlich 2). For the governments that are not stable like in the developing countries, they are forced to take loans so that they can manage the damages and help the citizens that are most vulnerable in their countries. The debt incurred in such governments had added to the considerable debts that they already had before the pandemic began.

In the United States, for example, the government enacted a relief plan of two trillion dollars which will drive up the debt of the country sharply, especially as the GDP shrinks. The U.S. economy has since contracted 4.8%, which is the most significant drop it has experienced since the Great Recession. The decline is expected to rise further by the second quarter of 2020 (Gramlich 3). On April 28th, the Congressional Budget Office projected that with no effective policy changes, the ratio of federal debt to GDP would rise to its highest by the end of the fiscal year 2021. After the pandemic is over, the governments will find it hard paying back loans mainly due to the low income and taxes that it will get from its citizens.

The world after Covid-19 is most likely to be unable to return to the world that it was before the pandemic struck. Many trends that are already in place in the global economy have been accelerated by the pandemic’s impact, especially in the digital world. The rise of remote working, telemedicine and delivery services had changed the way that the world was before the virus struck (Fernandes 3). The future of work has arrived faster than excepted. It has multiplied challenges such as the vulnerability of workers, polarization of income, more gig work, and a need for worldwide workers to adapt to more transitions of occupations. Such acceleration has been caused by advances in technology and considerations for safety and health. The acceleration was uncalled for, and it has caused many governments to use a lot of resources to adapt to these new trends. Labor markets and economies will take a lot of time to recover from the many resources it has used, and it will emerge with a lot of changes in long-term economic and societal choices....