COVID-19: How it Has Affected Economies Globally?
Since the outbreak of COVID-19 in China, millions of lives have been lost, with several countries having to take drastic measures such as imposing lockdowns to minimize the loss of lives.
Reports have it that 188 countries recorded cases of COVID-19 globally. The spread of the virus and the drastic measures taken by governments of most countries have not only left businesses counting their losses, but it has also introduced a new way of doing business.
The effect of COVID-19 on the global economy is one that has left several countries battling to recover from and return to doing business as usual. Although most countries that earlier put in place lockdown measures to flatten the curve have now lifted the restrictions, the pandemic’s effect has not been surpassed yet.
The COVID-19 pandemic disrupted economic, social, political, financial, and religious activities. The United States of America, Germany, the United Kingdom, Italy, France, Japan, and China, leading economies globally, are almost collapsing. Even more, oil prices and the stock markets are also falling rapidly. This has also led to the loss of jobs.
In this article, we will take a look at some of the ways COVID-19 has affected the economies globally.
Fall in prices of Oil and Natural Gas
Due to the COVID-19 pandemic, there has been a massive drop in the prices of crude oil and natural gas. This is not unconnected because most countries had imposed a total or partial lockdown; there was a sharp decline in the demand and use of fuel for transportation purposes in several countries.
One of the effects of COVID-19 on the global economy is inflation. Due to the lockdown imposed in most countries, businesses were forced to shut down their operations. As a result, millions of individuals have lost their jobs, demand and supply have been affected by the pandemic, making most countries’ economies likely to experience inflation.
More so, experts have predicted that most country’s GDP growth is expected to fall to an all-time low depending on the pandemic’s impact in the country.
Following the lockdown in China, the US, and most countries in Europe, there has been a decline in the demand for all types of industrial metals.
Most factories that use these industrial metals as their raw materials have been forced to close down, thus leading to a reduction in the demand for the metals.
Food and Beverages
It is no longer news that the COVID-19 pandemic and the lockdown imposed have disrupted both food production and supply. Most countries imposed import and export restrictions hence disrupting the food supply chain.
However, while the prices of cotton, meat, wool, and tea have declined, there has been an increase in the prices of oranges, cereals, arabica coffee, and seafood. Other foods that have suffered a decline in prices include corn, palm oil, sugar, and soy oil.
Foreign Direct Investment
One of the areas that the COVID-19 pandemic has negatively impacted the most is foreign direct investment. Sector such as tourism, other related industries like restaurants, hotels, transport, and sports centers were shut hence causing a sharp decline in foreign direct investments.
Long-Term Damage to Production, Output, and Growth
It is unarguably true that the effect of the COVID-19 pandemic has left a long term effect on the output and growth of many sectors. Despite the easing of the lockdown restrictions, most businesses are still battling for survival.
The effect of the pandemic has caused long term damage to various sectors of the economy. Most businesses will first have to battle for survival before they can start building and growing again. It is also worth mentioning that underdeveloped and developing countries are the worst hit as some will likely fall into recession.
In all, the COVID-19 pandemic has left a damaging and long-term effect on various sectors of the global economy. While businesses and economies battle for survival, the end might not be in sight yet as there is a likelihood that there will be the second phase of the outbreak.