The COVID-19 pandemic has wreaked havoc on people’s lives and health. The virus-containment measures have created a slowdown in the economy. There is a lot of ambiguity about the intensity and duration of it right now. According to the current Global Financial Stability Report, the pandemic has severely affected the financial system, and a worsening of the crisis could jeopardize global financial stability. Risk asset prices have plummeted since the start of the epidemic.
The repercussions of the draconian lockdowns have had a significant impact on GDP growth trends and are expected to continue for some time. While some analysts forecast a speedy recovery of the global economy, the facts on the ground suggest otherwise. The developing economies’ GDP growth projections are similarly not optimistic, and they are expected to remain below the baseline of 2019 estimates.
According to Benjamin Gordon Palm Beach, what impact will the return of COVID-19 have on the global economy?
Developing countries’ economies can be further strained by healthcare system issues. For example, during the initial phase of COVID-19, India suffered significant economic effects. The pandemic will directly impact earnings as a result of increased absence from work, an increase in inequality, and untimely mortality.
The decline in manufacturing can result in supply chain disruption and factory closures. Apart from industrial disparities, countries without universal healthcare coverage might be vulnerable to the COVID 19 pandemic’s consequences. The global pandemic has wreaked havoc on the travel and tourist business—the third-largest contributor to global economic growth in the industry.
Market turbulence
Volatility will rise, reaching levels last seen during the global financial crisis in some cases, as investors worry about the pandemic’s economic consequences. Market liquidity can worsen dramatically due to the increase in volatility, even in normally deep markets, contributing to erratic asset price movements.
Global stock market repercussions
The return of the coronavirus outbreak will also cause significant drops in global stock markets.
Industries that can get disrupted
The economic impact of the COVID-19 pandemic was previously seen mostly due to a drop in demand, which means that only a few people were ready to buy the commodities and services that were available in the global economy. With the return of the coronavirus, this dynamic will be readily visible in businesses that are significantly impacted, such as travel and tourism. Countries can further impose travel restrictions to slow the spread of the virus, and many people might not be able to book flights for vacations or business trips.
Conclusion
Benjamin Gordon Palm Beach says that the scope of the increase of the pandemic’s fundamental influence on the global economy is still unknown as the epidemic progresses. However, infectious diseases like COVID-19 can impose significant financial and economic consequences on the global financial system in a globalized world with interconnected economies. This needs a coordinated worldwide response as well as funding for vaccine creation and deployment. It also calls for a proactive international effort to develop economic stability models capable of withstanding extraordinary shocks, whether natural or man-made, which is at the center of global security.
