There are about 195 sovereign countries in the world, and almost all of them are affected by COVID-19. The globe is going through a deep crisis- naturally, politically, and economically. It has been observed that after certain intervals, the biggest economies in the world slide into an economic depression, and this instance has engulfed the whole world into such a scenario.
The economic crisis is no stranger to the world, right from 1938 to 2008; the global economy has undergone a recession. The world is going through the same phase since 2020 began. Although, this time, it seems a little different as the consequences are subjected to an unprecedented pandemic. Kristalina Georgieva, Head of the IMF, has said that global economic growth will be sharply negative this year. She has also predicted that the next financial year will also be seeing minimal recovery.
The World Bank’s President David Malpas has stated that the economy as a whole will contract by 5.2% this year, which means that 60 million people will be pushed towards extreme poverty. In comparison, emerging countries and developing markets will shrink by 2.5 % this fiscal year. According to the International Monetary Fund (IMF), this is the worst economic crisis since the great economic depression of the 1930s.
Economic activities around the world have come to a halt due to which around 7% of the advanced economies will contract, as has been predicted.
The worst-hit spheres are demand and supply in the market, finance and trade, travel, and tourism. This has led to a decrease in the business done between countries, therefore, paving the way for recession-like conditions. Many advanced economies like the USA, Canada, UK, France, Italy, Germany, etc. may likely go into recession sooner than later.
Now that issues like trade and political war between countries like the US and China and China and India respectively are more on fire than ever, the trading associations of these American- Asian countries are so in jeopardy that it will nevertheless end into sluggish development around the world.
Unfortunately, around three-quarters of the world’s 3.3 billion workers have seen their places of work closed down wholly or partially due to the pandemic. So majorly, the two biggest challenges in front of the global economy right now are ECONOMIC DEPRESSION and MASSIVE UNEMPLOYMENT.
Other challenges include extreme poverty, lack of food security, closing down of small businesses, and revival of the economy. Removing subsidies, protecting intellectual property, enforcing reasonable environmental rules, and providing rights to workers and other sects of the society are some of the significant challenges too.
Decreasing oil prices due to economic factors and lately, natural accidents and political conflicts between countries like Iran and the USA will make it more difficult for countries like India to decide between keeping ties intact with which country.
Giving out large public loans is draining the government into huge debts, and the interest rates are also not so rewarding for the authorities to make this system work. In the US, about 6.6 million people have filed for unemployment allowance until now, which is a huge sign of job cuts and salaries not being paid.
Not only domestically, but this pandemic is pushing economies towards international conflicts as the race of revival has caught hold of momentum in almost all parts of the world. As a result, rich countries will become richer, and the poor ones will become poorer. According to surveys, the developing nations are at the brink of most losses.
Elaboratively, UNEMPLOYMENT has been one of the major setbacks of this pandemic which is draining nations of wealth. Only core workers have been able to survive with the help of company loyalty, otherwise non and semi-skilled labour can be seen on roads heading back to their more permanent abodes.
ECONOMIC CRISIS is keeping the developmental momentum from pacing as each and every government is trying to cater to the medial and research needs at first. This has also led to the misutilization of resources as people are trying to take financial advantage of the situation.
INDUSTRIES like apparel, travel and tourism, recreation, lifestyle, and other parallel sectors are facing an acute loss of business as the only thing necessary right now is ‘essential buying’. Watching movies and eating in malls and other outlets will be the new normal after a long-long time.
Now, the world is dependent on large flows of dollars in terms of monetary help, which will increase it’s flow in the market, making it more robust than other currencies which in turn will increase INFLATION.
So, many significant challenges need to be dealt with. The solution might be only hidden behind those research labs around the globe that are trying to break through the shackles of an untreatable virus. Bringing an end to coronavirus will push the world economy to a speedy recovery which is still around a couple of years away right now.