Research Paper on COVID-19 Impact on the Economy: Direct and Indirect Effects

Introduction

An efficient economy comprises of sufficient international and national trade and economic best practices. Global diseases that either strike as epidemics or pandemics have enormous adverse effects on the proper flow of the economy at various levels. The coronavirus pandemic, for example, is currently causing risks and losses in all forms of economic sections. These effects are either direct or indirect, given that human is the steer gears of the economy and are the ones that have faced the impact of the disease. The global trade, which is the backbone of the world's economy, has been affected (Parliament, 2019). Constant is the rate that global diseases hit the marketplace. During the onset of global diseases, the economy is left fractured and in a position that requires a lot of inputs and time to regain standard structure. This discussion focuses on the effects caused by global diseases to the market-exports and imports, agricultural and tourism sustainability, industrial performance, foreign exchanges, nation economic integration relations, individual economies, and financial systems.

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Effects of Global Diseases on International Trade

The economic impact on regional and international trade by disease proliferation is bilateral- the imports and exports are particularly affected. Market liberation, privatization, and deregulation get stopped or reduced due to the policies brought about by authorities in the curbing of the diseases. The economic information and data transfer, which are basics for the stakeholders, get stagnated. Therefore, untoward effects occur (Forbs, 2006). Economic Population that depends on the international trade experiences a reduced income, which in turn leads to the lowering of the savings and personal interests. An economy without savings is imbalanced in terms of currency measure and economic affordability. Imports and exports decrease due to reduced skilled and unskilled labor-the workers and programmers of the foreign trade decline due to infections or fear of the disease. At the macroeconomic levels, global conditions affect the sharing and allocation of the available economic resources in an administrative trial to curb the spread and in the treatment of the disease (Parliament, 2019). A substantial increase in international economic activities such as market economies and technology transfer, social welfare, and transportation meets reduced incentives. Increased taxes are made to collect more finances to fund the strategic plans set to face such a global disease. Due to the increase in the cost of international trade, most traders withdraw, and the few that are left get risks of poor marketing due to increased costs. The result of reduced marketing affects the national and international economies. The trial to remedy these situations leads to more economic losses.

As an example, the coronavirus has affected the international economic trade through the closure of transportation between countries. The lockdowns affect the movement of traders and, to some extent, goods. The economy, therefore, has faced economic unbound in all the countries that have been hit. Asia, particularly China and Europe, which are more affected by this pandemic state, are the primary influences in international trade; therefore, their economies are failing and at risk of more declination (Bowman & Robert, 2020). The third world countries which depend on aids from first-class international relation are suffering economically due to reduced debts and profits.

Effects on Economic, Financial Stability in Institutions

The impact on financial sustainability in institutions is another great hit part of the economy by the pandemic and endemic global diseases financial. The rise of global diseases requires financial institutions to offer some aids in the fight and slow down the spreading of the disease. The demand for support results in interfering with the institutional budgets and an economic misfit the severity of the impacts causing the recession projects paused due to pandemics and endemics. The recession triggers vulnerability through institutional slow debt repayments, and this sharply raises interest rates (Forbs, 2006). Global diseases cause a reduction in the capacity of the institutions. The pandemic has caused a total lock of the continuity of institutional projects, and this becomes an intermediate of severe disruption even to monetary institutions, including declined assets and financial transactions. Widespread of the diseases could affect the workers who play significant institutional roles and therefore leading to absenteeism at work. As a result, some operations stop due to lack of professionalism- the loss and direct effects are perverted economically due to reduced or no utilization of the available resources and chances by that time (Parliament, 2019). In the rejuvenation of these institutions after the disease, bulk capital is used in the rebuilding process; hence economic sluggishness is faced.

The corona pandemic is currently affecting economic institutions globally; for example, the disease has been seen to affect significant organizations like the unique and world trade organization. The World Bank has not been able to cover all its transactions as social distance, and quarantine is being observed (Bowman & Robert, 2020). Most economic organizations' workers have been working online, and therefore some economic goals are not easy to be attained in this way.

Effect on Agricultural and Tourism Economies

Upon the declaration of a disease to be a pandemic, the situation adverse effects on agriculture. The lockdown of regions like the counties and national boarders means a decrease in the access of raw material for agricultural practices and more so no access to some markets for farm produce. The farmers end up making unrealistic losses, thus leading to a loss of interest in all agricultural activities. There is a reduced number of engagements in some of the farming practices that tend to bring about a monopolistic economic state. The monopolistic state causes inflation in the goods, and this affects the growth of the economy (Smith et al., 2019). For example, the coronavirus disease is causing huge losses in the highly perishable agricultural products. This is due to the ongoing market lockdown across some parts of the world. In the tourism economy, the sector has experienced a total shutdown of the economy as no tourists move into the affected areas due to fear of infection. For example, right now, most of the African countries that depend on tourism income are facing challenges in this sector- employees have are going for compulsory leaves, some are losing their jobs, and others are getting rationed salaries (Bowman & Robert, 2020). The maintenance of tourism operations has stopped due to a lack of income to facilitate it and professional workers who carry out these tasks.

Micro-Economy Effects

Global diseases like coronavirus have an impact on the conception possibilities of household resources. Corona has led to increased household expenditure on health services and nutritional foods. The time spent by family members in places of work is minimal; therefore, reduced incomes mean the closure of some household economic operations- these include the closure of consumptions of some goods (Forbs, 2006). The household also gets a liquidation of investment capital, house asset, and savings. The effect of this is diminishing the opportunities to generate stock and financial improvement.

Recommendations

In summary, the effect of global disease spread to all the economic sectors in the world's 21st-century setting. Both national and international need to cover the economic factors that are affected by pandemics, such as coronavirus disease. The covering is possible through policies. The best plan, in this case, is contingency planning. Trade, whether local or international, can be prevented through business preparation strategies to times of endemics and epidemics. High-level drafting by these businesses and financial institutions can aid in the positioning of standard processes in times of disease attack. This plan should be covered with a perspective of critical operations instead of recovery from the effects which can be prevented. Potential staffing and training in technological operations should be taken by the economy stakeholders to ensure that channels of financial services run even during the pandemic period. In facing the coronavirus disease, most trade affairs and commercial works should be done from home. The work from home is the best solution for all the economic sectors, including foreign exchange, monetary function initiation. Through this, the micro economy will not be affected as the economic population gets their earning. The general financial, national economic institution relation needs to be strategized. Countries and organizations can get into commercial treaties to face the pandemic's economic effects in collaboration.

References

Bowman, & Robert, J. (2020). The Impact of the Coronavirus on Global Trade: Now and Tomorrow. Https://www.supplychainbrain.com/articles/31028-the-impact-of-the-coronavirus-on-global-trade-now-and-tomorrow

Forbs, P. (2006). Macroeconomic and financial stability issues raised by Global Diseases. Https://www.fsb.org/wp-content/uploads/r_0604.pdf

Parliament, E. (2019). Economic impact of epidemics and pandemics. Retrieved from https://www.europarl.europa.eu/RegData/etudes/BRIE/2020/646195/EPRS_BRI (2020)646195_EN.pdf

Smith, K. M., Machalaba, C. C., Seifman, R., Feferholtz, Y., & Karesh, W. B. (2019, January 9). Infectious disease and economics: The case for considering multi-sectoral impacts. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6330263/

WHO. (2016). WHO GUIDE TO IDENTIFYING THE ECONOMIC CONSEQUENCES OF ... Retrieved from https://www.who.int/choice/publications/d_economic_impact_guide.pdf