Introduction
Health issues on a global scale have always been essential for the functioning of the whole global community in various domains, including economy, politics, social life, and others. Indeed, the breakouts of transmittable diseases in the worlds’ history have commonly been associated with recessions, crises, and adverse social and economic outcomes (Abodunrin et al., 2020). Since the workforce is a pivotal driver of the economy, any disruption in people’s ability to perform their work ultimately snowballs into a primary concern that affects various economic sectors. A similar tendency is observed with the impact of the recent Coronavirus pandemic on the life of the world. Lockdowns, social distancing requirements, and other anti-epidemic measures have drastically transformed the way people work and spend leisure time. Thus, COVID-19 has major negative implications for the global economy due to damaging the labor market, slowing manufacturing, blocking traveling business, and lowering the cost of stock market shares, causing the global financial crisis. This paper is aimed to overview the Coronavirus pandemic’s characteristics and analyze the outcomes of the disease outbreak within major economic spheres. A global shift in economic policy is needed to overcome the crisis.
The Coronavirus Pandemic
The breakout of a new disease called Coronavirus started as a local Chinese health issue and gradually transmitted across the borders of the country globally due to the mobility of the population. After an epidemic transformed into a global pandemic with thousands of deaths, the World Health Organization defined COVID-19 as a global pandemic and recommended strict measures to control the spread of the diseases (Abodunrin et al., 2020). The combination of international and local preventative and controlling interventions included social distancing, remote work and education as possible, requirements for wearing masks, quarantines, and closing of borders in multiple countries.
These factors slowed down economies and manufacturing as the scope of demand and supply shifted, which ultimately resulted in significant monetary losses coupled with the necessity to increase healthcare funding. Given the scope of impact, some scholars compare “the swiftness and severity of the coronavirus slowdown with the Great Depression that began in 1929” (Abodunrin et al., 2020, p. 14). Importantly, the globalization trends that have been a driving force of the global economy for several decades became a trigger of the disease spreading. After the borders have been closed and multiple industries were paralyzed, global trade encountered an unprecedented crisis, which is leading to global financial disaster.
The Outcomes of the Coronavirus Pandemic for Global Economy
Socio-economic Impact on Labor Market
A wave of an increase in the unemployment rate has been observed globally. Due to the lockdowns, multiple enterprises closed or bankrupted, leading to the loss of jobs for many people. For example, in the United States, “in April 2020, the unemployment rate reached levels as high as 14.7%,” with over 20 million people losing their jobs (Canuto, 2020, p. 7). As a result, such global economic leaders as the USA, China, and the Eurozone have been severely impacted by the pandemic’s financial burden (Canuto, 2020). Increased poverty and unemployment have a significant negative influence on the quality of life of people and lead to a more severe burden on the global economy in the long run.
Stock Market Shares
One of the most transparent and vivid indicators of a situation in the global economy is the stock market processes. With the outbreak of the Coronavirus pandemic, significant shifts in shares have been noticed. Indeed, as the GDP of the USA declined by more than 4% and the GDP of the Eurozone fell by 14% in the first quarter of 2020, consequences have become evident in the markets (Canuto, 2020). The uncertainty of the global health situation does not motivate investors to invest to the same extent they did before the pandemic, thus causing a decrease in global companies’ share prices (Abodunrin et al., 2020). Such instability in stock markets reflects the pre-recession situation, which might result in several outcomes financially. According to Carlsson-Szlezak et al. (2020), three scenarios are possible, including real recession, policy recession, and financial crisis, implying that financial policy reconsideration might be one of the ways to solve the problem. Overall, the monetary losses companies face due to the Coronavirus pandemics have a consequential influence on the economy on a global scale, forcing governments and central banks to allocate funds for recovery.
Manufacturing Decrease
Given the financial burden of the intensified health problem and the dependence of international corporations on global cooperation, many manufacturing entities stopped or decreased the rate of their performance. Indeed, global companies often outsource the labor force or cooperate with suppliers from abroad. However, with the emergence of lockdowns and the differences in economic situations in separate countries in response to COVID-19, their operations were disrupted (Canuto, 2020). For example, China, as a driver of the global economy, was forced to slow the work of its factories due to quarantining measures, which resulted in an international decline in trade and retail (Abodunrin et al., 2020). Furthermore, the shift in consumer demands toward the service sector is one of the characteristic features of the economy on a global scale.
Traveling Industry Disruption
Within the context of globalization, the increased rate of traveling had been an inevitable attribute of modern life, accounting for a significant share in domestic markets before the pandemic. With closed borders and lockdowns, flights have been canceled, leaving airline companies without work and revenue (Abodunrin et al., 2020). In response, local and virtual traveling initiatives have been developed to substitute the gap in the sector. However, the decline in the traveling industry has burdened the hospitality business and transport, resulting in significant monetary losses for the global economy and the need for restructuring.
Digitalization, Reversal Globalization, and Debt
One of the trends in the aftermath of the Coronavirus pandemic is the irreversible change of the approaches to performing in a global economic arena. Since multiple sectors have shifted to remote work with the help of the implementation of digitalized means, this trend is likely to persist. Ultimately, it will eliminate the need for facility renting, which will alter local budgets. In addition, according to Canuto (2020), the threefold legacy of the post-pandemic world is “the worldwide rise in public and private debt levels, accelerated digitization, and a partial reversal of globalization” (p. 14). Indeed, the public sector provides financial support to healthcare and economic sectors during the pandemic in the form of government funding programs. The taxes are lowered, and health insurance is promoted and made more affordable, which weakens the financial situation in separate countries (Canuto, 2020). Consequently, the debt that will be generated will ultimately damage the sustainability and resilience of state budgets, public and private organizations, individuals, and, as a result, the whole global community. Bankruptcy might be one of the likely but severely dangerous scenarios in the aftermath of the pandemic.
Similar to the irreversible changes related to the digitalization of multiple sectors of the economy, the trend of reverse globalization is likely to emerge. Since countries demonstrated resilience in managing economic issues with closed borders and the intensified traveling resulted in fast disease spreading, the world’s economy is shifting to a less globalized approach (Canuto, 2020). As the trends during lockdowns showed, online platforms and the informational technologies sector, in general, have gained significant growth, as well as research and healthcare, which sets goals for the future of the global economy. Overall, the observed changes indicate that the world’s economies will require significant restructuring and systematic change in the form of intensified digitalization, innovation, investment in new sectors, and de-globalization to revive after the crisis.
Conclusion
In summation, the Coronavirus pandemic has paralyzed the conventional functioning of the global community for more than a year and continues to persist as a burden to national economies resulting in a global economic crisis. Since the world’s economy is largely dependent on globalization, which is manifested through a multitude of international corporations, the interventions for controlling the disease disrupted its conventional functioning. Traveling industries collapse, unemployment grows, stock market shares decline, manufacturing slows, and debts grow as the outcomes of the Coronavirus pandemic. At the same time, new economic trends emerge, including digitalization, investment in informational technologies, local traveling, healthcare, research, and reverse globalization. Thus, significant changes in policies will be required to recover from the crisis caused by Coronavirus.
References
Abodunrin, O., Oloye, G., & Adesola, B. (2020). Coronavirus pandemic and its implication on global economy. International Journal of Arts, Languages and Business Studies, 4, 13-23.
Canuto, O. (2020). The impact of Coronavirus on the global economy. Policy Center for the New South. Web.
Carlsson-Szlezak, P., Reeves, M., & Swartz, P. (2020). What coronavirus could mean for the global economy. Harvard Business Review, 3, 1-10.