The Coronavirus pandemic has become the hottest topic of the new decade. The microscopic virus has caused a considerable resonance in all areas of activity: health care, industry, technology, and especially in the world and national economy. Substantial reduction in labor capacity, damage to critical economic chains, and panic caused market collapses and instant preventive measures taken by governments around the world. This essay will examine the major economic factors and the consequences of COVID-19 pandemic.
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Key Economic Principles and Indicators
The main macro and microeconomic factors that form the basis of any state’s economic policy are the gross domestic product (GDP), the degree of employment, and the general financial well-being of citizens. GDP is the aggregate market value of all final goods and services consumed on the territory of a state for 1 year. Obviously, by drastically limiting the volume of production and consumption, the state risks getting negative growth forecasts.
The degree of employment of the population is significantly correlated with GDP. Employment is the activity of the population that is connected with the satisfaction of personal and social needs, does not contradict the legislation, and usually brings earnings. On the other hand, unemployment is defined as the excess of the number of people seeking employment over the number of available jobs that match the profile and qualifications of applicants for these jobs. Ultimately, there is a growing number of unemployed citizens who are willing to consume but unable to produce. As a result, this situation is reflected in the overall financial well-being of the nation.
It should be further noted that the outbreak of coronavirus infection could not but affect the fundamental economic characteristics. At the same time, quarantine measures allowed to localize the pandemic, but it is worth understanding the cost of such a regime. Most likely, the virus will not cause death for a catastrophically large number of people but has the potential to plunge even the world’s fastest-growing economy into recession.
The uniqueness of the current situation is that it is infrequent for world history that a virus could cause such significant problems. Nevertheless, it should be noted that the critical effect on economic indicators was not the virus itself, but the actions taken by governments (Gostin & Hodge, 2020). Already today, it is possible to speak clearly about a list of areas that have been more severely affected by the collapse: public transport, tourism, and industry. Furthermore, the service sector was the most affected in the world (Fernandes, 2020). It is worth noting that the pandemic caused the closure of businesses in countries with high disease rates, and a sharp increase in demand for everyday products, especially antivirals, masks, and disinfectants.
Due to self-isolation measures, a significant proportion of the catering, entertainment, and recreational facilities were forced to suspend operations. Thus, according to Fernandes (2020), this sector accounts for a quarter of Italy’s GDP, a country in which more than 30,000 patients have already died (Google News, n.d.). Undoubtedly, although it is less than a percentage of the population of the peninsula, such a loss will have a severe impact on the state economy. For macroeconomics, the collapse of markets caused by the panic of the pandemic has been significant. The decline in production activity around the world led to a decline in demand for oil, which led to lower oil prices (Fernandes, 2020). In addition, concerns and fears related to the spread of the COVID-19 virus and its impact on the global economy negatively affected investor sentiment, leading to a sharp decline in share prices in major markets. Against the background of the economic threat, there was a collapse of the national currencies of some countries.
In fact, the global economic downturn, the collapse of financial markets, and the loss of investment in large companies have caused a socio-economic crisis. According to World Bank research, COVID-19 will cause the first increase in poverty since 1998 (fig. 1). The link between the elements is transparent: production is suspended at the time of the pandemic, citizens do not receive income, but spend their reserves to survive. It is not known how long the global problem will last, therefore, a particular segment of the population may enter the poverty line.
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In addition, the economic crisis has demonstrated to the population the maturity or immaturity of the political apparatus in their state: how quickly and effectively steps have been taken and whether there is material support for those in need. Another factor in the most severe socio-economic decline has been the health system, which has shown citizens a lack of planning and rapid response to the virus outbreak. Most hospitals were overcrowded, inoperable, or unprofitable (Vineet et al., 2020). Finally, the pandemic has slightly altered the model of social interaction between people in developed countries: citizens have become more responsible for public and personal health (Allcott et al., 2020). As a rule, this was expressed in social distancing and limiting contacts and interactions that were not vital.
This section highlights those medical organizations that have been more exposed to the coronavirus effect. It is advisable to place all the material in Table 1.
|World Health Organization||The main tool for solving international health problems of the Earth’s population||Maximum awareness, financial aid fund, stimulation of scientific research (World Health Organization, 2020)|
|Centers for Disease Control and Prevention||Health and safety through the provision of information||Monitoring and information exchange, situation solutions, quarantine measures (Adkins, 2020)|
Table 1. The two most important sources of struggle against the coronavirus
- Adkins, L. T. (2020). What is the CDC’s role during the coronavirus crisis? ShareAmerica. Web.
- Allcott, H., Boxell, L., Conway, J., Gentzkow, M., Thaler, M., & Yang, D. Y. (2020). Polarization and public health: Partisan differences in social distancing during the Coronavirus pandemic. Stanford University. Web.
- Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world economy. SSRN. Web.
- Google News. (n.d.). Coronavirus (COVID-19) [Data set]. Web.
- Gostin, L. O., Hodge Jr, J. G. (2020). US emergency legal responses to novel coronavirus. JAMA Networks, 323(12), 1131-1132. doi:10.1001/jama.2020.2025
- Mahler, D.G., Laknerr, C., Aguilar, A. C., Wu, H. (2020). The impact of COVID-19 (Coronavirus) on global poverty: Why Sub-Saharan Africa might be the region hardest hit. WorldBankBlogs. Web.
- Vineet, C., Toner, E., Waldhorn, R., & Washer, L. (2020). How should US hospitals prepare for coronavirus disease 2019 (COVID-19)? NCBI, 172(9). 621-622. Web.
- World Health Organization (WHO). (2020). How has WHO responded to COVID-19 [Video]. YouTube.Web.