Impact of COVID-19 on the Global Economy Essay Sample

The coronavirus pandemic has become a real challenge for many areas of human life. The world community was not ready for such changes, so the economy faced a crisis. The pandemic has led to a constant surge in global stocks, employment difficulties, recessions in most economies, a decline in the restaurant, hotel, and tourism industries, an increase in online sales, but a drop in regular sales.

Global stocks are in constant flux, and developed economies are in recession amid the protracted pandemic. Key indices affecting stock markets fell sharply, including the Dow Jones, Nikkei, and the FTSE. Some indicators have dropped so much, returning the economy to the state of the crisis in 2008 (Jones et al., 2021). Vaccine development has positively impacted equity markets, especially in the US and Asia, pushing the indices out of the negative territory. Simultaneously, the economies of large countries suffered significantly, especially against the background of the decline of the hotel, restaurant, and tourism industries, which were the primary sources of income. Overall, the IMF estimates the global economic downturn to be more than 4% for 2020 (Jones et al., 2021). The unique exception was the Chinese economy, which showed growth in contrast to other countries. Thus, the countries’ economies are in recession, and world stocks have gone into more significant dynamics, and stock indices have also experienced a fall.

The hotel and restaurant sector and the tourism industry suffered the most due to the closure of borders, cancellation of flights, and the introduction of restrictions on visits to public places. The hospitality industry has seen a significant drop in the number of accommodation bookings. These changes led to the closure of businesses due to bankruptcy, mass layoffs (Jones et al., 2021). Besides, the pandemic has resulted in significant losses for airlines. Layoffs also occurred in other areas of employment, which led to an increase in unemployment and people seeking government assistance. A large number of people found themselves below the poverty line. The World Bank estimates that up to 150 million people will face extreme poverty in 2021 (“COVID-19 to add as many as 150 Million extreme poor by 2021,” 2020). The COVID-19 pandemic has caused an increase in poverty, increased unemployment, and a crisis in tourism and hospitality.

Significant changes took place in the sales area, which triggered an increase in online sales, but businesses faced logistical difficulties. As shopping malls and other retail sites are closing, people are more likely to buy goods online ( Jones et al., 2021). In addition, rising unemployment has negatively impacted purchasing power, forcing people to cut back on spending; accordingly, purchasing behavior has changed significantly. People now prefer to shop online, which requires courier services and logistics companies to expand. Simultaneously, the closure of borders, additional conditions for transportation has complicated all processes in the supply chains. Many businesses began to look for new ways to solve the supply problem and move offline to online.

In conclusion, the coronavirus pandemic has become an unexpected burden for the entire global community. Many people lost their jobs, businesses went bankrupt, although logistics and online sales rose. The economies of many countries are in crisis, and stock indices are in constant motion. The hospitality and tourism industry has been hit hardest by strict lockdowns and border closures by all countries.

References

Jones, L., Palumbo , D., & Brown, D. (2021, January 24). Coronavirus: How the pandemic has changed the world economy. BBC News. Retrieved September 12, 2021, from https://www.bbc.com/news/business-51706225.

COVID-19 to add as many as 150 Million extreme poor by 2021. World Bank. (2020, October 7). Retrieved September 13, 2021, from https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021.

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