Covid-19 and Its Economic Impacts On the Globe

Covid-19 pandemic has changed the global socio-economic dynamics. Empty streets have become the new normal during this pandemic. The stores are shut down, public gatherings are banned, travel restrictions and physical distancing are imposed. The world is practising the lockdown to slow down the spread of Covid-19. Airlines, import-export companies, retailers and tourism are among the most affected areas in the global arena. These changing dynamics of the world are the outcomes of health crises owing to coronavirus. Hundreds of thousands of lives are engulfed by this virus and it has put a heavy toll on the global economy.The coronavirus pandemic is considered to be even deadlier. This pandemic cannot be correlated with the ones of the past. There are various reasons for it. It is a global pandemic; not limited in the middle-class income countries; interest rates are at historical lows and the world is much more integrated; the current crisis has generated the spillover effects on supply chains and destruction of demand and supply, due to which its effects have invaded into the economic niche of the world.In today’s world of globalization, the impacts of the disease are not limited to mortality. These effects have infiltrated into the global economy due to an interconnected and dependent financial system. Covid-19 is creating a negative economic outlook by severely affecting global trade. According to the United Nations conference on trade and development, the outbreak could cost the economy up to two-trillion dollars this year. Trading is being interrupted due to the current state of affairs; and will ultimately damage the supply chains everywhere.The continued situation of lockdown has disrupted the supply chains. The supplier networks around the globe have been disconnected in the wake of the Covid-19 spread. United States institute for supply management has reported that 75 % of companies have a disruption in their supply chains due to which manufacturing has been halted. Automobile companies and iPhone manufacturers import parts for their products from different countries. Due to this pandemic, the cost of manufacturing has increased and the markets around the world are significantly shrinking, giving rise to unemployment.

Affected supply chains are resulting in an economic recession which has a multiplier effect on jobs around the world. The companies, industries and agencies are vacating the seats and rearranging their business models according to changing dynamics. The International Labor Organization has assessed that 25 million jobs will be declined and 35 million people will be pushed below the poverty line due to the decline in economic activities. In this scenario, many services have been able to go digital such as E-learning, online fitness services, online shopping and telecom applications. But at the same time, there are various industries that cannot provide online services for example tourism industry. Many business models cannot be transformed into digital models due to which the number of unemployed persons is increasing day by day. These predictions are portraying the dismal picture of the economic trajectory. Moreover, the severe lockdown has led to a decrease in consumption rate and consumers have also changed their consumption patterns. The declined demand and supply rate have decreased the efficiency of every business and its associated activities.

In this uncertain crisis, the definite calculations about the effects of Covid-19 on the economy are not possible. The OECD has forecasted the global economic growth falling to 2.4 % in 2020 compared to 2.9% in 2019. These economic predictions are manifesting in the form of sluggish growth of the industrial sector, halted travel business, reduced revenue generation and increased unemployment throughout the world. With a decreasing graph of economic activity, the chances of a global economic recession are increasing which is affecting the masses as an indirect effect of coronavirus pandemic. The world is trying to adapt to this novel situation and policymakers need to design a definite plan to cope with such a natural disaster.