The COVID-19 pandemic drastically changed the lives of people all around the globe. It has left a scarring effect on all aspects of life including the global economy. Economists agree that the widespread disease will leave a long-lasting impact on the world’s economy which will be evident long after the world is COVID-19 free.
The alarming speed at which the infection spread did not give business owners enough time to come up with strategies to overcome the loss they will face. In addition, the worldwide lockdowns which included a ban on trade and travel also played a role in deterring the business performance. Israel Figa speculates that the world’s economy will take a long time to return to an acceptable state because of the deep impact the pandemic had on it.
COVID-19 Impacted Areas Of Global Economy
Increased Rate of Unemployment
As soon as the news of the coronavirus pandemic was announced, the entire world went under complete lockdown. This led to many people losing their means of livelihood, especially daily wage earners. The lockdowns caused a lot of businesses such as restaurants, etc. to close down completely due to inactive business. The ban on trade and travel also forced businesses to cut down their employees which led to mass unemployment all over the world. Job vacancies all over the world are in the low and people are struggling to find a means of income, whether they are in the blue-collar zone or lower ones.
Dr. Israel Figa states that the rate of unemployment will be a major problem even after the world is free of COVID-19 because companies would have found ways to get things done with a lower amount of employees. On the other hand, there could be a mass increase in new businesses as people would find ways to sustain themselves to earn a living.
Extreme Market Volatility
COVID-19 stirred up the market values of stocks, shares, and other investment assets majorly. Big shifts were seen in the stock market because of the COVID-19 enforced lockdowns that led to a worldwide pause in business and dealings. Many big firms saw a decline in their stock rates as the pandemic crisis grew. Major stock markets such as the FTSE (the Financial Times Stock Exchange), the Dow (stock market index of US-based companies), and other big names saw a tremendous decline in their rates in the first few months of the pandemic.
While some of the stock markets such as the major Asian and US ones have recovered, a majority are still in the danger zone. Israel Figa says that the recovery of the major markets started in November when the first vaccine for the coronavirus COVID-19 was announced. As a result of the declining economy, several banks in many different companies slashed their interest rates.
Crumbling Tourism Industry
The tourism industry is among the sectors that faced the worst impact of COVID-19. Countries all over the world imposed travel restrictions, blocked borders, and banned international flights as a measure to stop the infection from spreading even further in their territories. The ban on travel, naturally, had a negative impact on the tourism industry. It would be fair to say that the sector was one of the largest business-related casualties that COVID-19 brought.
With the announcement of successful vaccines, border restrictions and travel ban is slowly being lifted. However, many countries are still not risking the spread of the infection with open travel and have imposed strict quarantine measures on travelers. The crumbling tourism industry is also a contributing factor for unemployment as lack of business has led to the complete closure of many tourism firms.
The coronavirus pandemic has affected almost all aspects of the world that we once lived in. From failing businesses to increased rates of unemployment to slashed interest rates, Dr. Israel Figa speculates that several countries may be on their way forward to a financial crisis. While the pandemic has brought a wave of problems in the global economy, the world has dealt with pandemics in the past and come back stronger. As a developed society, we will be able to come up with ways to restore the world’s economy with innovative ideas.