Impact of Covid-19 on World Economy



Covid-19 is a virus that quickly spreads all over the world. After the first finding of this corona virus in Wuhan, China, at the end of 2019 the world has faced crisis in all aspects of life whether in education, tourism, health sector as well as economy. During the COVID-19 epidemic the world has faced drastic effect on economy.  As the infection increases preventive measures has been taken like area lock-downs, social isolation and Quarantine has effect the business .The large number of people has been affected from this disease so less people can work. As a result supply chains disrupted, productivity affected which results in business closures. Fear of this epidemic, job losses, income drop and the increased uncertainty results in more firm closures. All the above discussed factors have drastic impact on the global economy. Through commerce and the global value chain, these domestic disturbances affect trading partners. COVID-19 has had a smaller impact than the Great Depression of 2008.

The new COVID-19's influence on GDP in several countries:

The following are the effects of the new Corona virus on GDP in various countries.

GDP growth rate

2008

2009

2019

2020

2021

World

3

-0.1

2.9

-3

5.8

China

9.7

9.4

6.1

1.2

9.2

Japan

-1.1

-5.4

0.7

-5.2

3

Korea

3

0.8

2

-1.2

3.4

United States

-0.1

-2.5

2.3

-5.9

4.7

ASEAN-5

5.4

2.5

4.8

-0.6

7.8

European Union

0.9

-4.2

1.7

-7.1

4.8

Africa

4.5

3.2

3.2

-1.7

4.6

 

COVID-19's three major economic impacts have had an impact on the global economy in the following ways:

1. Direct effect on output:

Globally, the shutdown has had a significant impact on production. Other countries felt a direct influence as well, as their governments pass similar measures. Many countries' slowdowns or lock-downs had an impact on exporters to other countries. Despite the severity of this infection decreases after the invention of vaccine and by adopting preventive measures, these areas grew slowly in the first half of 2020.

2. Market disruption and supply chain disruption:

Many manufacturing firms rely on imported intermediate supplies from China and other disease plagued areas . Many businesses rely on sales in China to accomplish their financial supplies. The slowdown in economic activity—along with transportation restrictions—had a direct impact on the impacted countries.

3. Firms and financial markets are affected financially:

Some businesses, particularly those with insufficient liquidity, are stressed by temporary disruptions in inputs and/or production. Traders in financial markets were unable to predict or comprehend which companies would be susceptible. Many financial market participants have taken unprofitable investment positions in this uncertain environment, further eroding trust in financial instruments and markets. As a result of the concern over counter party risk, the global economy has experienced severe financial market disruption.

According to the World Bank's baseline global pandemic scenario, global GDP will fall by 2% in developed nations, 2.5 percent in poor countries, and 1.8 percent in developed countries. A global issue necessitates a worldwide solution, which necessitates global collaboration and cooperation, not just on a national level.   

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