Abstract
The novel coronavirus (COVID-19) poses unprecedented challenges to global economy and international development and has become a humanitarian crisis affecting millions of lives and livelihoods throughout the world. It affects almost every economic activity and operation and at the same time poses a threat to every sector of the economy, people, places, and businesses. COVID-19 brought not only crisis, disruptions, and challenges but also bred fertile ground for opportunities, innovations, and digitalization of economic sectors. In this context, this chapter focuses keenly on the economic impacts of the COVID-19 crisis, including the economic challenges and opportunities it creates, and accordingly, recommendations have been presented.
TopIntroduction
The world Health Organization declared COVID -19 a pandemic in January 2020, due to the severity of illness and that it spreads quickly across countries and/or continents. Covid-19 is a global crisis, as this infectious virus quickly spreads because of the hyper globalization and in return it shakes every corner of the world, society, healthy organizations, educational system, economies, government and what not. As per World Trade Organization (WTO, 2020) due to this pandemic merchandise trade fall between 13% and 33% and the figure is worse as far as commercial services are considered. While as per International Monetary Fund (IMF, 2020) there is a 3% contraction of global economy- (cited in Lamy & Pedrosa, 2020). Global economy in 2020 has reduced by 5.3% but grows by 8.0% in 2021 as per another report (Congressional Research Service, 2021). Further this report (Congressional Research Service, 2021) also revealed that economic growth has fallen rapidly in second quarter of 2020 but regains quickly in the third quarter and is mostly recovering since. While in 2021, world economy experienced strong rebound, but due to the fresh threats from COVID 19 variants economic growth is forecasted to decline from 5.5% last year 2021 to 4.1% in 2022 and will further fall to 3.2% in 2023 (United Nations [UN], 2022). Moreover, UN (2022) also highlighted that global economy is continuously facing COVID-19 and its new variants (Delta & Omicron) which further leads to escalation in inflation, debt, policy uncertainty, poverty, unemployment and income equality and will continuously disrupt economic activities. According to International Labour Organizations (ILO, 2022) global unemployment will reach to 207 million in 2022(cited in “Global Unemployment”, 2022. India today), which means the rate is almost 21 million higher than the rate in year 2019. Henceforth, this figure warns of slow and uncertain recovery of labour market worldwide. India today newspaper in another report (“Explained: Impact of Omicron Variant”, 2021) highlighted that Omicron variant has become a new concern for Organization for Economic Cooperation and Development (OECD) as it could cause severe economy slowdown and could impact economic recovery worldwide. This report also mentioned that if Omicron becomes more severe and dominant COVID variant it could trigger further challenges and risks to already struggling supply chains, result in inflation over a extended period of time and compels government organizations to implement strict restrictions on mobility and lockdowns and subsequently further disruptions in demand for goods and services could affect economic activities badly. As per this report, travel and tourism sector, aviation, restaurant and other ancillary sectors are also witnessing significant fall and these sectors are already experiencing a heat of previous waves of COVID-19 (“Explained: Impact of Omicron Variant” 2021. India Today).
“What we are seeing is an economy that functions right through these waves of COVID”,-US Federal Reserve Chairman Jerome Powell (cited in John & Schneider, 2022).
Key Terms in this Chapter
Gross Domestic Product: It is defined as monetary measure of the market value of the total goods produced and services provided in an economy over a specific period of time.
Organization for Economic Co-operation and Development (OECD): It’s an intergovernmental economic organization which promotes economic progress and world trade by creating opportunity to compare policy experiences, solve common problems, connects, and coordinates national and international policies of its member countries.
Liquidity: It means availability and accessibility of assets, capital or cash to a company or market.
Supply Chain: It’s a network or a system that exists between company and its suppliers involved in production and distribution of specific products and services.
Economic: The branch of social science deals with production, distribution, and consumption of resources such as wealth.
COVID-19: An illness (infectious disease) triggered by coronavirus SARS-CoV-2 that causes respiratory tract infection.
International Labour Organization: International Labour Organization is a part of the United Nations which is concerned with the world of work by framing international labour standards, promotes social protection and rights at work settings and encourages equal employment opportunities.
Digitalisation: It’s a process of inclusion of digital technologies into business, and social sector with the objective of improving them and their revenue streams.
Pandemic: It’s an infectious disease outbreak that spreads quickly across countries and/or continents. Its more severe than epidemic as it affects more people, larger area, and causes high mortality rate.