The world’s worst economic crisis yet

Coronavirus and Economic Crisis (9781630692001 ... - Amazon.com

As we all know, the coronavirus has made a large impact on the world in various ways. It has marked a difference in social, environmental and economic aspects. We can think of the world as a machine, a machine that is constantly working, constantly turning natural resources into products and creating new things. However, this virus has put a stop to this. It has paralysed the world.

Since the emergence of the virus in the Chinese city of Wuhan late last year, the coronavirus has spread to over 185 countries and territories infecting over 2.7 million people and killing over 190,000 globally, according to data compiled by Johns Hopkins University. To prevent the spreading of the virus, authorities around the world have implemented measures to lock down their countries and cities. Borders have been closed while schools, universities and workplaces have been shut down. However, many people are not just dying due to the virus itself, but all the people that live depending on their daily salary are suffering by anti-spreading measures, as they have no means to make money and feed their families, causing a great deal of irreparable damage to many families 

UNEMPLOYMENT

The precautions taken because of the virus throughout quarantine has made it very difficult for the world to keep producing. All the industries that work on production are falling apart as nobody is willing to spend money on these things as they are not essential, and prefer to spend money on essential things such as food.  It’s sad to say, but this economic crisis due to the “Great Lockdown” has caused industries a big loss in money. As industries have less money, they need to decrease their employees’ salaries, and in many cases, people have been fired.

The problem is that it’s hard to find a new job right now. In the United States, the number of people dealing with unemployment has hit a record, signalling an end to a decade that was predicted to be of expansion for one of the world’s largest economies.

SERVICE INDUSTRIES – AIRLINES

Companies in the services industry which were a major source of growth to many economies are now among the hardest hit in the coronavirus pandemic. Many of them have decided to close as they are not receiving enough income. An example of this is the airline Avianca. Avianca has decided to close all of its offices in Peru as the maintenance cost of the company is no longer affordable. The travel industry has become badly damaged, with airlines cutting flights and customers cancelling trips as governments around the world have introduced travel restrictions to try and contain the virus. The EU banned travellers from outside the bloc for 30 days to seal its borders because of the coronavirus in March. In the US, Trump has banned travellers from European airports from entering the US. Data from the flight tracking service shows that the number of flights globally has experienced a grand depression; there were more than 160,000 flights last year, those which are now around 60,000 flights.

Flight tracking data chart - 27/04

TRADE

Manufacturers have also been hit by the pandemic and the world trade volume could once again plummet this year. Global trade, which was already slowing down in 2019 is expected to now be weighed down even further. The World Trade Organization in its latest forecast this month said that global trade volume could decrease by 12.9% – 31.9% this year depending on the trajectory of the global economy. However, the WTO said that “Under both scenarios, all regions will suffer double-digit declines in exports and imports in 2020.” 

ECONOMIC DOWNGRADE

The impact of the virus on countries’ economies, makes investors fear that if the coronavirus continues to spread, no governmental action may be enough to stop the economic decline. The International Monetary Fund, whose assessment of the economy is widely followed, expects the global economy to shrink by 3% this year. Only strong economies such as China’s and India’s are expected to grow in 2020, the IMF describes this economic decline as the worst one since the Great Depression of the 1930s. Although it is said that the coronavirus has plunged the world into a “crisis like no other” it is expected that if the pandemic fades in the second half of 2020 , there will be a rise in global growth by 5.8% which is a positive aspect to take in consideration.

RELAY ON TECHNOLOGY

During this pandemic, there has been a huge relay on technology. Governments around the world have urged employees to work from home where possible. Companies such as Zoom have boosted up their income as now more people rely on video conference calls and emails to hold meetings or to get any task done. Many other entertainment companies in social media (Instagram, Tik Tok, Facebook, Twitter etc), Netflix, and Youtube, are gaining more profit than before, as now a vast amount of the world’s population is under lockdown and entertain themselves using these. 

POSSIBLE SOLUTION TO REGENERATE THE WORLD’S ECONOMY 

Governments must find a solution to regenerate their countries’ economies after the pandemic as the damage has been too much. This pandemic has caused families’ income to decrease. As a result, this has caused demand to decrease as well as causing the economic problems many companies are facing now, as they are not receiving enough income to maintain themselves. Now that both the income and the demand has decreased we need to find a way to raise these up in order to regenerate the world’s economy. A possible solution for this is for the government to begin letting go some money in order that family income could increase which would, therefore, begin to make the demand increase as well, as these are proportional. This action will behave as an investment; all the money that the government will be letting out will then be returned by taxes, etc, once companies continue growing. Of course, this reactivation plan will not be immediate and for this to work, there must be low inflation in order to maintain economic stability, which will encourage saving, investment, economic growth, and maintain international competitiveness.

POSITIVE ASPECT

Less pollution: The European Space Agency has registered an impressive fall in pollution across the European skies. The image taken clearly shows a strong reduction in emissions now in place over major cities across Europe; particularly in Paris, Milan and Madrid. And a very similar trend has been detected across India’s industrial hubs as strict lockdown measurements have been implemented since March.

Satellite images in Europe: Satellite images over India:
Satellite images of the European skies, showing the levels of Nitrogen Dioxide in March-April 2019 and March-April 2020Satellite images of the Indian skies, showing the levels of Nitrogen Dioxide in March-April 2019 and March-April 2020 - 27/04

As these 2 images show, there has been a significant change in the amount of greenhouse gas emissions in both locations. This could lead to re-think how we are effectively reducing the effect of greenhouse gasses after the pandemic and the establishment of new measures.

Sources

https://www.cnbc.com/2020/04/24/coronavirus-pandemics-impact-on-the-global-economy-in-7-charts.html

https://www.bbc.com/news/business-51706225

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