COVID-19 is wreaking havoc on world economies with a number of cases surpassed 5.3 million worldwide. The Asian Development Bank (ADB) estimates that coronavirus pandemic could cost the global economy between $5.8tn and $8.8tn.
ADB report finds that the economic losses in Asia and the Pacific could range from $1.7 trillion under a short containment scenario of 3 months to $2.5 trillion under a long containment scenario of 6 months.
The People’s Republic of China, from where the coronavirus emerged, could suffer losses between $1.1 trillion and $1.6 trillion. The report notes that border closures, travel restrictions, and lockdowns that countries implemented to arrest the spread of pandemic will likely cut global trade by $1.7 trillion to $2.6 trillion.
Investors around the globe fear that the spread of the coronavirus will destroy economic growth and that government action may not be enough to stop the decline. Although, the central banks around the world have moved to cut interest rates and roll out massive stimulus measures to help combat the impact of the outbreak. Cutting down the interest rates makes borrowing cheaper and encourage spending to boost the economy.
COVID-19 Pandemic and Rising Unemployment
Besides infecting the people every day, the COVID-19 is troubling their livelihoods as well. Lockdown measures involve the closure of face-to-face-businesses, closure of schools, universities, restaurants, theaters. Closing a restaurant limits the foodservice supply but simultaneously it also means that the sacked waiters and cooks have no income. Closure of private schools especially in a country like Pakistan means no income for the teachers as well as support staff.
Unemployment is on the rise even in most developed economies of the world. According to the US Labor Department, in just nine weeks, 38.6 million have sought unemployment benefits.
While Pakistan’s Ministry of Planning estimates that some 12.3 million to 18.5 million Pakistanis may lose their jobs due to COVID-19. The initial estimates for the economic cost due to “moderate to severe shocks from the coronavirus pandemic on Pakistan touch the figures of $12.42-15.52 billion(2-2.5 trillion PKR).
Global Economy Will Shrink By 3% This Year
International Monetary Fund (IMF) says that the global economy will shrink by 3% this year. The international financial body describes the economic decline as the worst since the Great Depression of the 1930s. It also expects a rise in global growth to 5.8% next year if the COVID-19 pandemic fades in the second half of 2020. IMF also predicts that the UK economy will shrink by 6.5 percent in 2020.
The National Council of Applied Economic Research, a think-tank in the capital city of India, estimates an economic contraction of 12.5 percent this year unless there’s a huge stimulus. The COVID-19 has plunged the global economy into a crisis like never before.
Impact of COVID-19 On Media Industry
Although the demand for online entertainment is increasing because of the ongoing lockdown, the COVID-19 also sends shockwaves to the media industry. For instance, in India the big releases postponed, film, TV, and web series shootings halted, theatres unable to screen movies, daily wage employees struggling for their next meal. Perhaps the most hard-hit are the daily wage earners of the media industry. The accurate figures regarding the impacts of the lockdown on the media industry are still being evaluated.
COVID-19 Impacts on Laborers
The COVID-19 disproportionately hurts marginalized communities due to loss of livelihood and lack of food, shelter, health, and other basic needs. The majority of the workforce in third world countries like India and Pakistan is informal and undocumented.
Some 80 percent of India’s workforce is employed in the informal sector, and one-third working as casual laborers. The biggest impact is emerging on a very large number(500 million according to one estimate) of daily wagers, migrant workers who are out of jobs, and are going back to their villages. Scores of them are also stuck in the cities with hardly any resources to support the family and children.
The situation is equally troublesome for Pakistan where 75% of the country’s total 65 million work-force comprises informal laborers. Around 40% of them are in the agriculture sector while remaining work in services, manufacturing, and other sectors.
COVID-19 Impacts On Airline Industry
Governments around the world have introduced travel restrictions in an attempt to contain the spread of the virus. The travel industry has been badly damaged, with airlines cutting flights and customers canceling business trips and holidays. Discouraging the movement from across the borders has devastated the airline industry like never before. Airbus has cut production by a third and Emirates expects no recovery until 2022.
The exact impact will depend upon various factors i.e., duration and magnitude of the outbreak and containment measures, availability of government assistance, consumer confidence, as well as economic conditions.
The pandemic is very likely to continue to haunt the trade and movement of people at least in the near future unless some viable treatment or vaccine takes its control.
Many Economies Are Expected To Enter Recession
What Will Be The Long-term Effect Of The COVID-19 Pandemic On the Economy?
One long-term impact is the rise in government debt as spending increases and tax revenues collection collapse. When the economy recovers, attention will be turned to pay it down. “Capital and Ideology”, a new book by Thomas Piketty, a French economist, shows that after the first and second world wars many governments in the West turned to heavier taxation of the incomes and wealth of the richest to achieve that goal. Another option is financial repression, where governments force citizens to lend to them at below-market rates.
What Are The Centers Of Biggest Outbreaks?
WEF finds that the biggest outbreaks are in prisons, religious ceremonies, and workplaces, such as meatpacking facilities and call centers. Any environment that is enclosed, with poor air circulation and high density of people, spells trouble. This includes the terrible outbreaks in nursing homes, and restaurants as well.