In just a matter of a few months, all our lives have been turned upside down or one can say, have been brought to a standstill. But is this the only one-dimensional problem that one can make out of the ongoing COVID–19 crisis? Well, as I make our peace with the ‘new normal, the world is getting affected in probably more than just one way. The repercussions that we know about of this crisis are just the tip of the iceberg.
The United Nations Framework for the Immediate Socio-Economic Response to the COVID-19 Crisis puts it bluntly “The COVID-19 pandemic is far more than a health crisis: it is affecting societies and economies at their core. The pandemic is more likely to increase poverty and inequalities at a global scale.” The threats posed by COVID–19 pandemic are like a double-edged sword, which is threatening both our lives and our livelihoods.
While on the one hand, this war against a common invisible enemy is proving to be tremendously challenging for our frontline warriors, on the other, it has become a source of existential crisis for many businesses around the world. The countries are suffering at the cost of shutting businesses, crumbling economies, dwindling life, and more. The ongoing crisis is certainly the worst crisis that the world is facing in a long time. And resultantly, the results of this crisis are going to be long-lasting and difficult to overcome.
Though the pandemic is definitely affecting every sphere of life the economic slowdown it has initiated is the worst feared drawback. Each and every country is being affected by this pandemic in different ways and in varying intensity but no nation, no society is left untouched by the drastic effects this crisis is unleashing upon all of us. Therefore, this article is designed to assess the crucial economic impact that the world is facing, owing to the ongoing unprecedented situations. Let us explore how the global economy has suffered a big blow from this invisible enemy.
The outbreak of the COVID–19 pandemic was extremely sudden and thus it required prompt responses from the governments to control the situation and to save the lives of people. And the best response or way out, at the moment, was to shut down everything. Towns, cities, and entire countries were under strict lockdowns to halt the spread of the virus. But this lockdown and shutting down of all the activities resulted in huge drawbacks for the economic growth of the world.
The International Monetary Fund (IMF) has clearly stated that global economic growth is going to recede by over 3 per cent in the year 2020, and it will be the steepest slowdown that the world will witness since the Great Economic Depression of the 1930s.
The most immediate and brutal effect of severe lockdowns was observed on the working people. Many people across regions, domains, and industries suffered huge blows when the pandemic gulped down their employment. With markets shut and almost no customers, many businesses and industries came to the verge of extinction.
The worst effects are observed in the informal sector, where the majority of the workers do not enjoy any protection from such unprecedented situations. According to a report by the International Labour Organization (ILO), almost 1.6 billion informal economy workers, have suffered massive damage to their capacity to earn a living. And this number, unfortunately, is likely to go up.
In some cases, it has been observed that workers engaged in the informal sector of the economy, if not suffered a total loss of their livelihoods, have been severely impacted by the dent in their earnings by as high as 60 per cent. With no apparent solution to this pandemic in hand, other than shutting down activities, the loss of livelihoods and income is more likely to do deeper.
Medium to small enterprises play a crucial role in the economies of nations. But with this pandemic, these small, independent enterprises have suffered the biggest blow. As these enterprises target the end consumer, the shutting down of the market meant no consumer at all. Hence, most of these industries and businesses had no other option but to shut down their operations completely.
The main problem begins when these businesses are not able to revive themselves as their capital has dried up and resuming operations means an unhindered flow of capital. Thus this critical clog in the economic growth of nations is finding it hard to adjust to the ‘new normal and is struggling to revamp itself again. According to the same report by ILO, it has been estimated that more than 436 million enterprises worldwide are facing high risks of serious disruptions.
With the rising unemployment rate and loss of earning potential, one of the biggest impacts that many organizations and states are worried about is the concern for rising food security that might prop up again. From shutting down major economic activities and people losing their jobs to disrupted supply chains and rising food prices, it will be difficult for the nations to ensure sufficient, nutritious food for the most vulnerable groups of society.
As per the United Nations World Food Programme, it has been estimated that around 265 million people could face acute food security by the end of 2020. This figure is alarmingly distressing as many food security programmes which have been in constant efforts for many decades to demolish hunger from the world will face a severe blow. Also, it is dreaded that because millions of people are being pushed into the below-poverty bracket, it will be an added stress to the already excruciating situation.
As we have discussed that the effects of COVID–19 are far-reaching and long-lasting, and it is also observed that it affects people across age groups. Students, belonging to different educational levels, are being affected severely by the pandemic. According to a report by UNESCO, the nationwide lockdowns are impacting over 60 per cent of the student population in the world. While on the one hand, where school-going students are bearing the loss of learning; on the other hand college and students undergoing professional studies are facing a huge crisis, because of no class sessions and apparently no hiring season.
Many students studying abroad are also facing great distress as they are finding it hard to survive in an unknown place without proper employment opportunities. Though because of technological advancement, some proportion of students have resumed their learning but the quality and skills are getting compromised.
Also, the graduating students who were looking for job and employment opportunities are also suffering and as a result, the unemployment rate in several countries has skyrocketed. With no apparent solution in sight, students have no option but to wait for the situation to improve.
With the world facing a huge crisis and the absence of any fool-proof solution, the hit-and-trial methods are being resorted to. From countries to individuals, no one has remained aloof from the drastic side effects of the COVID–19 pandemic. With some countries and regions in the world, coming slowly back on track,
As it is rightly said, “going with the flow”, and this is what the countries and people have been practising while trying to restart their lives. The pandemic has thrown some unconventional challenges to overcome and thus these challenges are requiring extraordinary solutions. With the countries slowly coming back on track, life is now restricted with numerous measures to fight the virus. People are practising social distancing, using face covers and masks, and sanitisers are the new necessity. Though it is extremely difficult to work under these conditions, with no apparent readily available solution, prevention is the best tool in the hands right now.
With many businesses facing extinction, the digital domain has gained a different level. Numerous businesses are finding solace in the digital space and are making their functioning as digitalized as possible. Many industries have survived this blow because of their digital presence and compatibility with working over the internet. This has become a major lesson for many budding enterprises to make themselves digital and compatible with the current situation to beat the odds.
This is the best and most cherished hope of millions of people. Until a safe vaccine is available to the masses, going back to normal life is out of the question. Vaccination is the best solution to beat the COVID–19 situation but this will take a long duration to come true. Though numerous scientists and doctors are working day and night to come up with a vaccine as early as possible, the process will take its own course. Until then we all have to live distanced lives, which we are calling the ‘new normal.