COVID-19 pandemic is spreading at a very high rate worldwide. There are more than two million confirmed cases and a number of deaths trolled to 134,615 across the globe. In order to save people’s lives, many countries lockdown which results in reduced money flow at a very high rate. As a result, the global economy is projected to decrease by –3%, if and only if this breakout vanishes in the second quarter of 2020.
The effect of an unprecedented event could last long as it terminates the supply chain model at a very high rate, it also leads to a reversed cash flow model in many countries. The result of this pandemic could be worse than the prediction.
The global outbreak comes with a number of uncertainties, and it will change the world forever. Policymakers of different nations are working together to reduce their impact but they could not cut it off completely. To enable recreation when an epidemic fades away, it is essential to fix substantial targeted fiscal, monetary, and financial market measures, especially for the sectors which are facing sharp impacts.
In order to run the economy in a tough time, nations are bound to spend a lot of money on their health care services or providing medical facilities including ventilators, masks, medical equipment, etc., for its citizens. They are more focussed to fix this problem and working on a measure of relief.
In order to bear this pressure, nations are suffering from negative GDP and fiscal growth. The IMF said that these economic fallouts depend on uncertain factors like the pathway of the pandemic, the progress in finding the vaccine and therapies, the intensity and efficacy of containment efforts.
Out of all continents, only Asia will have a positive growth rate of 1 percent, in which China, India, Indonesia will grow by 1.2 percent, 1.9 percent, and 0.5 percent respectively and, other countries are forecast to experience large contractions (Thailand, -6.7 percent), IMF said.
Other countries in the advanced economy group will face the negative growth of –6.1 percent, which includes the United States (–5.9 percent), Japan (–5.2 percent), United Kingdom(–6.5 percent), Germany(–7.0 percent), France(–7.2 percent), Italy(–9.1 percent), and Spain (–8.0 percent).
IMF report said that other regions are projected to experience severe slowdowns or outright contractions in economic activity, including Latin America (–5.2 percent)—with Brazil’s growth forecast at –5.3 percent and Mexico’s at –6.6 percent; emerging and developing Europe (–5.2 percent)—with Russia’s economy projected to contract by –5.5 percent; the Middle East and Central Asia (–2.8 percent)—with Saudi Arabia’s growth forecast at –2.3 percent, with non-oil GDP contracting by 4 percent, and most economies, including Iran, expected to contract; and sub-Saharan Africa (–1.6 percent)—with growth in Nigeria and South Africa expected at –3.4 percent and –5.8 percent, respectively. Following the dramatic decline in oil prices since the beginning of the year, near-term prospects for oil-exporting countries have deteriorated significantly: the growth rate for the group is projected to drop to –4.4 percent in 2020.
The recovery of this pandemic would be uncertain for the year 2021. However, according to the IMF, the estimated global growth would be 5.8 percent, in which advanced economic nations grow by 4.5% whereas, for developing nations, it would be around 6.6 percent.
COVID-19 affects the functionality of the entire economic system, it will take time to get back on track. Meanwhile, many things will turn into different phases. Someone remarked that everything will change forever. Yet, we believe change should not occur at the cost of the lives of our brothers and sisters.