The pandemic is giving the people an economic blow and around the world they are losing their jobs in large numbers. Large gatherings are cancelled and people undertake social distancing, making it impossible for many businesses to continue. An epidemic anywhere can be a threat to people everywhere. That’s true now with COVID-19, and it was true in 2014, when the Ebola virus was spreading like wildfire across Liberia and West Africa.
Based on different scenarios for the impact of COVID-19 on global GDP growth the International Labour Organisation (ILO) estimates indicate a rise in global unemployment of between 5.3 million and 24.7 million from a base level of 188 million in 2019. It also suggests an increase of 13 million in high income countries.
The current decline in economic activity and constraints on people’s movements is impacting both manufacturing and services. While self-employment does not typically react to economic downturns, it acts as a “default” option for survival or maintaining income – often in the informal economy.
For this reason, informal employment tends to increase during crises. However, the current limitations on the movement of people and goods may restrict this type of coping mechanism. The services sector, tourism, travel and retail are especially vulnerable.
An initial assessment by the World Trade and Tourism Council forecasts a decline in international arrivals of up to 25 per cent in 2020, which would place millions of jobs at risk. Working poverty is also likely to increase significantly. The strain on incomes resulting from the decline in economic activity will devastate workers close to or below the poverty line.
The growth impacts of the virus used for the unemployment estimates above suggest an additional 8.8 million people in working poverty around the world than originally estimated. Under the mid and high scenarios, there will be between 20.1 million and 35.0 million more people in working poverty than before the pre-COVID-19.
Largely vulnerable group of society
Epidemics and economic crises can have a disproportionate impact on certain segments of the population, which can trigger worsening pre-COVID-19.
Based on past experience and current information on the COVID-19 pandemic and insights from previous crises, a number of groups can be identified: (a.) Those with underlying health conditions and older people are most at risk of developing serious health issues. (b.) Young persons, already facing higher rates of unemployment and underemployment, are more vulnerable to falling labour demand, as witnessed during the global financial crisis.
Older workers can also suffer from economic vulnerabilities. After the MERS outbreak, older workers were found to be more likely than prime-age individuals to experience higher unemployment and underemployment rates, as well as decreased working hours. (c.) Women are over-represented in more affected sectors (such as services) or in occupations that are at the front line of dealing with the pandemic (e.g. nurses).
The ILO estimates that 58.6 per cent of employed women work in the services sector around the world, compared to 45.4 per cent of men. Women also have less access to social protection and will bear a disproportionate burden in the care economy, in the case of closure of schools or care systems. (d.)
Unprotected workers, including the self-employed, casual and gig workers, are likely to be disproportionately hit by the virus as they do not have access to paid or sick leave mechanisms, and are less protected by conventional social protection mechanisms and other forms of income smoothing and (e.) Migrant workers are particularly vulnerable to the impact of the COVID-19 crisis, which will constrain both their ability to access their places of work in destination countries and return to their families
Overall slowdown of economic activities
The 2019–20 coronavirus pandemic has had far-reaching consequences beyond the spread of the disease and efforts to quarantine it. As the pandemic has spread around the globe, concerns have shifted from supply-side manufacturing issues to decreased business in the services sector. Supply shortages are expected to affect a number of sectors due to panic buying, increased usage of goods to fight the pandemic, and disruption to factories and logistics.
In addition, it also led to price gouging. There have been an expectation of supply shortages of pharmaceuticals, with many areas seeing panic buying and consequent shortages of food and other essential grocery items. The technology industry, in particular, has been warning about delays to shipments of electronic goods. Some analysts estimated as early as January that the economic fallout of the epidemic on global growth could surpass that of the SARS outbreak. It was also estimated that a $300+ billion impact on world’s supply chain that could last up to two years.
The Organization of the Petroleum Exporting Countries reportedly “scrambled” after a steep decline in oil prices due to lower demand from China. Global stock markets fell on 24 February 2020 due to a significant rise in the number of COVID-19 cases outside mainland China. By 28 February 2020, stock markets worldwide saw their largest single-week declines since the 2008 financial crisis. Global stock markets crashed in March 2020, with falls of several percent in the world’s major indices. While the monetary impact on the travel and trade industry, it is likely to be in the billions and increasing.
World wide economic effects of Covid-19
Low income individuals are more likely to contract the coronavirus and to die from it. In both New York City and Barcelona, low income neighborhoods are disproportionately hit by coronavirus cases. Hypotheses for why this is the case include that poorer families are more likely to live in crowded housing and work in the low skill jobs, such as supermarkets and elder care, which are deemed essential during the crisis.
In the United States, millions of low-income people lack access to health care due to being uninsured or underinsured. Many low income workers in service jobs have become unemployed. Coronavirus recession refers to an economic recession which may happen across the world economy in 2020 due to the 2019–20 coronavirus pandemic.
As the coronavirus spreads around the world, the stock markets have experienced their worst crash since 1987. Many countries with large economies, such as Italy and Spain, have enacted quarantine policies. This has led to the disruption of business activities in many economic sectors.
Economic turmoil associated with the coronavirus pandemic has wide-ranging and severe impacts upon financial markets, including stock, bond, and commodity (including crude oil and gold) markets. Major events included the Russia–Saudi Arabia oil price war that resulted in a collapse of crude oil prices and a stock market crash in March 2020. The United Nations Development Programme expects a US$220 billion reduction in revenue in developing countries, and expects COVID-19’s economic impact to last for months or even years.