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Ever since The World Health Organization declared the Coronavirus Outbreak a global emergency on January 31st, 2020, the economy of many countries in the world have started to go downhill. The first sign of this was China’s industrial production being down by 13.5 percent from January to February. To add on to the economic troubles in China, car sales in the nation were down by 85 percent in the month of February. With China being one of the world’s biggest manufacturers for goods in the world, this already has a large impact on the global economy. By the end of February the FTSE stock index is down by 11 percent, one of the largest drops that the FTSE index has ever seen.
By March of this year the World Bank had already started to make efforts to combat the decline of many economies around the world as a result of the COVID-19 pandemic. The world bank issued twelve million dollars to be used for immediate aid with the disease. Two days later on march fifth, the United States Congress passed a bill for an $8.3 billion emergency fund. Less than one week later, the European Commission announced a 31 billion euro Coronavirus Investment Fund to help with sectors in need of extra money such as health care. This fund would pull from “leftover” money in the European Union’s budget and equates to about 41 billion US dollars. Throughout the month of March, many other aid plans are put into action to help those struggling with the Coronavirus outbreak.
For many large countries in the world, the month of March presented some of the largest drops in GDP that some countries had ever seen. The Dow Jones, FTSE, and Nikkei stock indexes were able to partially recover by April, only to go down in value once again. The price of oil measured in barrels saw a dramatic drop in the month of March as well. The price went from $50 per barrel at the end of February all the way down to below $20 per barrel by the start of April. On April 9th OPEC and Russia had reportedly agreed to reduce their oil production by at least ten million barrels per day. Not long after, the G20 countries announced their support for this plan.
The global economy will be in a completely different state than it was at the start of 2020 by the time the Coronavirus pandemic ends. Even though the global economy has seen a decline for almost the entire year so far, there is still hope for the future. According to this Statista article by Felix Richter, “the current downturn wasn’t caused by something fundamentally wrong with the financial system or the overall economy”(Richter). This means that unlike the stock market crash and the Great Depression of the 1930s which many people are starting to compare the current global economy too, a quick recovery is still possible. The current problems with the economy due to the pandemic are much more like those of a natural disaster. With all of the measures already taken to help the economy recover, the economy could see growth as close as early 2021. In that same Statista article the International Monetary Fund “expects a return to growth in 2021. That’s assuming that the pandemic fades in the second half of 2020”(Richter). Given this information, recovery efforts matter now more than ever. If the disease cannot be brought under control by the second half or end of this year, economic growth may not begin once more in 2021.
Graph from the International Monetary Fund showing projections for GDP growth in 2021. Source: https://www.statista.com/chart/21397/global-gdp-growth-forecasts-before-and-during-the-covid-19-pandemic/
Great changes could also be coming in how countries interact with each other in terms of business. According to this New York Times article by Neil Irwin, “a more every-nation-for-itself mentality was already becoming ingrained before COVID-19, in ways the pandemic seems to be reinforcing”(Irwin). Before the Coronavirus pandemic began, many countries were wanting to become less dependent on exports from other nations, one example of this would be the trade war between the United States and China. This could be seen as a movement for deglobalization, where countries and corporations will seek to become less reliant on other countries across the world. The only other large scale episode of globalization the world has seen came from WWI and the 1918 flu pandemic. This resulted in a remaking of global trade as well as the British pound losing complete superiority over the global market. The same could happen now, except with the US dollar but other nations do not seem to be very eager to increase the importance of their country's currency to such an extent. Also, the United States has already taken measures to ensure the dollar’s importance in the global market.
With the pandemic getting worse and worse with every passing day, it’s also causing many problems for economies around the world. Many countries are trying to fund the cause to help anyone who is greatly impacted by COVID-19. With all of these countries trying to help they are also trying to figure out a solution to their own economic crisis. Also, there are demands for certain products which have been stated before leaving other products untouched and no money is going towards them. There are more problems than some countries can’t address all at once and are incapable of fixing their economies. The global market is, of course, something that has to be taken into account. Globalization has helped developing countries support their economies and fund towards what is needed. Obviously, with the global pandemic, there are more demands than there are for other products these countries provide thus hurting their economies immensely and plummeting statistically.
By March of this year the World Bank had already started to make efforts to combat the decline of many economies around the world as a result of the COVID-19 pandemic. The world bank issued twelve million dollars to be used for immediate aid with the disease. Two days later on march fifth, the United States Congress passed a bill for an $8.3 billion emergency fund. Less than one week later, the European Commission announced a 31 billion euro Coronavirus Investment Fund to help with sectors in need of extra money such as health care. This fund would pull from “leftover” money in the European Union’s budget and equates to about 41 billion US dollars. Throughout the month of March, many other aid plans are put into action to help those struggling with the Coronavirus outbreak.
For many large countries in the world, the month of March presented some of the largest drops in GDP that some countries had ever seen. The Dow Jones, FTSE, and Nikkei stock indexes were able to partially recover by April, only to go down in value once again. The price of oil measured in barrels saw a dramatic drop in the month of March as well. The price went from $50 per barrel at the end of February all the way down to below $20 per barrel by the start of April. On April 9th OPEC and Russia had reportedly agreed to reduce their oil production by at least ten million barrels per day. Not long after, the G20 countries announced their support for this plan.
The global economy will be in a completely different state than it was at the start of 2020 by the time the Coronavirus pandemic ends. Even though the global economy has seen a decline for almost the entire year so far, there is still hope for the future. According to this Statista article by Felix Richter, “the current downturn wasn’t caused by something fundamentally wrong with the financial system or the overall economy”(Richter). This means that unlike the stock market crash and the Great Depression of the 1930s which many people are starting to compare the current global economy too, a quick recovery is still possible. The current problems with the economy due to the pandemic are much more like those of a natural disaster. With all of the measures already taken to help the economy recover, the economy could see growth as close as early 2021. In that same Statista article the International Monetary Fund “expects a return to growth in 2021. That’s assuming that the pandemic fades in the second half of 2020”(Richter). Given this information, recovery efforts matter now more than ever. If the disease cannot be brought under control by the second half or end of this year, economic growth may not begin once more in 2021.
Graph from the International Monetary Fund showing projections for GDP growth in 2021. Source: https://www.statista.com/chart/21397/global-gdp-growth-forecasts-before-and-during-the-covid-19-pandemic/
Great changes could also be coming in how countries interact with each other in terms of business. According to this New York Times article by Neil Irwin, “a more every-nation-for-itself mentality was already becoming ingrained before COVID-19, in ways the pandemic seems to be reinforcing”(Irwin). Before the Coronavirus pandemic began, many countries were wanting to become less dependent on exports from other nations, one example of this would be the trade war between the United States and China. This could be seen as a movement for deglobalization, where countries and corporations will seek to become less reliant on other countries across the world. The only other large scale episode of globalization the world has seen came from WWI and the 1918 flu pandemic. This resulted in a remaking of global trade as well as the British pound losing complete superiority over the global market. The same could happen now, except with the US dollar but other nations do not seem to be very eager to increase the importance of their country's currency to such an extent. Also, the United States has already taken measures to ensure the dollar’s importance in the global market.
With the pandemic getting worse and worse with every passing day, it’s also causing many problems for economies around the world. Many countries are trying to fund the cause to help anyone who is greatly impacted by COVID-19. With all of these countries trying to help they are also trying to figure out a solution to their own economic crisis. Also, there are demands for certain products which have been stated before leaving other products untouched and no money is going towards them. There are more problems than some countries can’t address all at once and are incapable of fixing their economies. The global market is, of course, something that has to be taken into account. Globalization has helped developing countries support their economies and fund towards what is needed. Obviously, with the global pandemic, there are more demands than there are for other products these countries provide thus hurting their economies immensely and plummeting statistically.
discussion questions:
How do you think corporations will try to adapt their business models in order to become less vulnerable to future events similar to the Coronavirus pandemic?
How do you think the pandemic will affect the way in which countries interact with each other in terms of trade and their reliance on foreign countries for production?
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