RED ALERT: Pandemic outbreak has taken over the world. On 30th January 2020, the World Health Organization (WHO) has declared a COVID-19 public health emergency of international concern. The COVID-19 that started its journey from china now sadly has its roots in more than 190 countries globally.
Around 5 years ago in 2015, a Ted talk was held in Vancouver, in which co-founder of Microsoft, Bill Gates had warned the world about pandemics. Bill Gates predicted about germs war. He stated:
“If anything kills over 10 million people in the next few decades, it’s most likely to be a highly infectious virus rather than a war — not missiles but microbes,”
Coronavirus has shaken the world economy. The world’s economic picture was different before Coronavirus hit. Around 6 months back the world’s economic trends were totally different. Coronavirus has moved the world toward economic disaster and financial crises
The impact of lockdown caused severe economic downfall for all small to big businesses. The stock market is falling because of the minimum business in the market. Economists have rarely seen an economic graph like this before. Asia, Europe, Africa, Australia all continents are facing huge corona side effects even the biggest economic hub America is also not safe from it.
The total global Gross Domestic Product (GDP) of the world is over US $86 Trillion. Due to the current shutdown trillion dollars of circulation is stopped. The global monetary loss of GDP is predicted to be approximately $76.7 billion. The forecast loss percentage in GDP may decrease from -0.09% to -0.4% depending on the depth and duration of the outbreak.
Let’s look at all the shocking impact of COVID-19 caused on the world’s economy so far:
1. Oil Market Crash
Corona outbreak spared no industry. The most shocking news for many people was when they heard America’s crude oil market crashed. West Taxes Intermediate (WTI) is the prime oil benchmark from North America.
For the first time in history, the oil market crashed in the USA. The oil rate went into negative prices. In the last 4 months, oil came from $60 to $0 per barrel.
Two major oil producers like Russia and Saudi Arabia who started an oil price war are now also facing immense losses. Due to reduced transportation, very little oil consumption, and little oil import during lockdown the oil prices are still collapsing.
2. Global Supply Chain Problem
There are an Estimated 450 million people working in the global supply chain system. COVID-19 has put lots of supply chain networks at big risk. Suppliers are not able to transport goods across the border.
China is the leader in manufacturing and global product distribution is also disrupted. Because of the closing down of factories and shops, there is very little production. Millions of orders are canceled.
The Belt and Road Initiative (BRI), train supply, and cargo supply all are disturbed. The minimal global supply chain in the outbreak period has made the world lose billions of dollars.
3. Export Market Downfall
Countries’ economic growth highly depends on regular exports. Shutting down businesses and transportation mediums has extremely lessened the trading activities between governments and all trading parties. World Trade Organization (WTO) said the global trade is expected to drop 13% to 32% during the 2020 pandemic and the world GDP may lose $77-$347 billion.
Every country is going through financial losses due to minimal exports. China’s export shrink has caused $50 billion falls in the global shipment. According to an analysis of the UN Conference on Trade and Development (UNCTAD), America’s tariffs generated a 25% export loss, European Union with nearly $15.6 billion, Japan $5.2billion, Korea $3.8 billion. Pakistan exports are feared to face an economic loss of around $4 billion and India’s exports are reduced by 34.6 % until now. The United Arab Emirates is also facing huge losses due to the reduction in crude oil export.
4. Increased Unemployment
Unemployment and underemployment are the other big issues caused by coronavirus. International Labour Organization (ILO) assessed that COVID-19 could increase unemployment by over 195 million worldwide. In the US over 33 million jobless people have claimed unemployment benefits funds in the past seven weeks.
7.5 million Small enterprises are at risk of permanently shut down. In this challenging time, many companies made layoff decisions as they are unable to pay wages and salaries to their employees. Expatriates are being unemployed first. This layoff would risk deep-rooted damage to the economy.
5. Robots to Replace Human Workers
Machines are taking over manpower. The most alarming thing is many people would get fewer jobs in the future. As a COVID-19 grip the world, many businesses are considering replacing robots with human capital in the job. Pandemic is going to open new opportunities for automation.
Small to large companies are planning how to use machines to maintain social distancing and to minimize the number of workers. In South Korea robots have been used to distribute hand sanitizer and measure temperature. Walmart, popular retailers in the US are using robots to scrub floors. Business owners would rely on automation more if the manpower is unavailable.
6. Low Financial Reserves
In this war of survival countries’ reserves are getting low due to investment in health care and public welfare. It has the worst impact on developing countries because they already had few reserves to manage any pandemic condition.
International Monetary Fund (IMF) executive board approved millions of dollars to overcome this health crisis. World Bank is also facing immense financial crises due to the slowdown in global economic growth. As the pandemic is not ended yet marinating reserves in the future is a challenge for all the countries.
7. Traveling Restriction
No one knew a few months back that the world would be shut down this way. Covid-19 has brought massive losses for the airline industry. Travel restriction started from China now it is imposed on almost every country. The travel industry is losing millions of dollars with every passing day. As the coronavirus hit, the business travel sector is expected to lose $820 billion in revenue.
There are very few domestic or international flights taking place. Countries are unable to generate earnings from tourism all over the world. A foreign government is allowing only a few people to travel back to their home town. Only medical protective products like masks, sanitizers, and ventilators are permitted to import. Air traffic restriction has shaken the world’s economic trends.
COVID-19 outbreak has immensely affected every industry globally. The financial crises are going at a fast speed. It would take much time to get back to normal economic conditions.
Filza Taj has completed her MPhil in Human Resource from Kinnaird College. She loves sharing her knowledge and subject expertise with others. Crafting words that bring the most value to the readers stay her utmost priority. she loves writing about different niche.
Very informative, I like the topics that you’ve discussed as these are just a few of the issues people tend to throw under the rug regarding the pandemic. Hopefully only good can be upraised from this once it is all over.
Muhammad Arham says
Really well researched article. You have beautifully covered all the industries that have been effected by COVID-19. Thankyou for sharing this important information.
Farheen Amaid says
Well researched work. Very informative for the new graduates and will help to understand reason for decrease in employment rate. Thank you for sharing such information
Are you an economist? If so, where did you graduate from?
Absolutely loved reading it. I hope world economy go back to normal soon.
You have compelling points, but I have great faith that everything will return back to normal eventually. Thank you for sharing this!