A Critical Overview of the Global Economic Impact of the Coronavirus Pandemic
The coronavirus pandemic has wreaked havoc on the global economy, with nearly every country affected. As governments struggle to contain the virus, businesses and national economies have suffered. Despite the development of vaccines, there is still uncertainty about what recovery from the pandemic will look like. This article provides a selection of charts and maps to help understand the economic impact of the virus so far.
Global Shares in Flux
The stock markets have been highly volatile due to the pandemic, affecting the value of pensions and savings accounts. The FTSE, Dow Jones Industrial Average, and the Nikkei saw significant declines in the first months of the crisis, with the FTSE experiencing its worst performance since 2008 in 2020. Although some markets recovered in January 2021, there is concern about further lockdowns and delays in vaccination programmes that could trigger market volatility.
A Difficult Year for Job Seekers
The pandemic has resulted in job losses and income cuts for many people, with unemployment rates increasing in major economies. In the United States, the proportion of people out of work reached 8.9% in 2020, according to the International Monetary Fund (IMF), ending a decade of job expansion. Millions of workers have also been put on government-supported job retention schemes. While job vacancies have returned to 2019 levels in Australia, they remain low in many other countries, and some experts predict that it could take years for employment levels to recover.
Most Countries Now in Recession
The global economy has shrunk due to the pandemic, with the IMF estimating a 4.4% decline in 2020, the worst since the Great Depression of the 1930s. The only major economy to grow in 2020 was China, with a 2.3% increase. The IMF predicts global growth of 5.2% in 2021, driven primarily by countries such as India and China, with big services-reliant economies expected to recover more slowly.
Travel Still Far from Taking Off
The travel industry has been severely impacted by the pandemic, with airlines cutting flights and customers cancelling business trips and holidays. New variants of the virus have led to tighter travel restrictions in many countries, and the number of flights globally has yet to recover.
Hospitality Sector Has Shut Its Doors Worldwide
The hospitality sector has suffered greatly, with millions of job losses and many companies going bankrupt. Reservations in all the top travel destinations have fallen, and consumers are still feeling anxious about returning to stores. This shift in shopping behaviour has significantly boosted online retail, with global revenue of $3.9 trillion in 2020.
Pharmaceutical Companies Among the Winners
Governments around the world have invested heavily in Covid-19 vaccine and treatment options, leading to a rise in shares for some pharmaceutical companies involved in vaccine development. Moderna, Novavax, and AstraZeneca have seen significant increases in their share prices, while Pfizer has seen its share price fall due to competition and high production costs.
Conclusion
The coronavirus pandemic has had a profound impact on the global economy, with businesses and national economies struggling to recover. The stock markets have been highly volatile, and many people have lost their jobs or seen their incomes reduced. While the global economy is predicted to grow in 2021, recovery in big, services-reliant economies may be slow. The travel and hospitality sectors have been severely impacted, while some pharmaceutical companies involved in vaccine development have seen their shares rise.
