Before COVID-19, the global economy was on a relatively smooth journey to expansion and growth. However, according to IMF’s world economic outlook published in October 2019, global economic activity was weak, and the momentum in the manufacturing industry was weakened substantially to levels reminiscent of the global financial crisis of 2009.
Fast forward to January 2020, IMF reported a global growth of 2.9% from 2019 to 3.3% in 2020. It also made projections for the figure to rise to 3.4% come 2021.
Sadly, it didn’t take long before the cold hands of the pandemic got in the way of and grounded global activities in virtually every facet of human endeavor to a halt.
In its April 2020 World outlook post themed “the great lockdown,” the IMF noted that the pandemic had severely impacted economic activities including employment. Of which the implication is a -3 percent in contraction in 2020.
It’s no longer news that the pandemic has dealt the world a devastating socio-economic blow. The effect will be felt for as long as it will take for smart investments, societal, sustainable recovery, and climatic resilience are deployed to cushion the negative impacts of the pandemic virus on the global economy.
According to reports from the United Nations on world economic situation and prospects in 2021, the much anticipated sustainable recovery from the grips of the pandemic will depend on certain factors, including the quick rollout of vaccines, thoughtful stimulus measures, and of course, the quality and efficacy of measures put in place to resist similar shock in the future.
These economic prospects will only avail themselves if collective efforts are channeled into an inclusive and sustainable plan to drive smart policies, build strong and effective multilateral systems, and make impactful investments.
What are the key areas of impact?
According to the UN Department of Economic and Social Affairs, a whopping 131 million people were pushed into poverty, and the majority of them are women and children.
A United Nations report shows that 50 percent of the workforce in intensive sectors like hospitality, tourism, and hospitality are women to collaborate the IMF report.
And because these sectors are the worst hit by the pandemic, more women and girls are on the receiving end of the unemployment, poverty, and economic devastation caused by the coronavirus.
On the global front, the world would have been plunged into a Great Depression if not for the timely stimulus measures that raised US$12.7 trillion that saved the world economy at the verge of collapse.
Where is the pandemic leading us?
Earlier in 2020, there were bleak projections about the possibility of the virus hitting harder before the vaccines get to everybody.
Considering how badly the pandemic struck and overstretched the weak health care system, caused a massive loss in trades and tourism, stunted remittances, and subdued cash flow amidst soaring debt, the world still has to contend with food security to disruptions of supply chains.
Even though most regions of the world are expected to experience some growth at a different pace, some businesses will still find it difficult to service their debt and avert the financial crisis.
The collapse in oil demand and crash in oil prices are other aspects of the pandemic that emerging and developed countries have to contend with. There is also a dip in demand for metals and other materials such as rubber and platinum, which are essential for making vehicle parts.
Despite the sad economic reality, projections are still optimistic of global growth and expansion in the region of 4.2% in 2021.
Now, that’s hope. But, to hasten the growth process and get the global economy out of the woods, policymakers need to rise to the challenge in the coming months and implement more policies that will spruce up economic activities.
They also have to consistently churn out innovative stimulus packages such as income support to workers and credit support packages for businesses.
“oil producers must seize this opportunity to diversify their economies.”
Regarding the collapse in demand and oil prices worldwide, at most, low oil prices can serve as temporary support or economic “first aid” to accelerate global growth once the lid on economic activities is lifted.
However, oil producers must see this as an opportunity to diversify their economies. In the paths to global growth, the short goal is to curb the health crisis we have on our hands and look at rolling out smart reform programs to boost and sustain economic growth across the board.
Countries worldwide should be thinking of global coordination and cooperation as the actions needed to alleviate the economic sabotage caused by the pandemic because it’s only then that a robust global recovery can come to fruition.