ASSIGNMENT

Topic:
Corona and Its effects on whole global economy and whole global world economy

Submitted To:

Mam. Zoia

Submitted By:

Tehmina Sharif

Roll No. 2016-SOC-BS-27

BS Sociology 8th Semester

GHAZI UNIVERSITY D G KHAN

185 countries and territories — infecting more than 2.7 million people and killing over 190,000

globally, according to data compiled by Johns Hopkins University.

To stem further spread of the virus, authorities around the world implemented measures

to lock down countries and cities to varying degrees. That includes closing borders, shutting

schools and workplaces, and limiting large gatherings.

Those restrictions, which the International Monetary Fund called the “Great Lockdown,” brought

much of global economic activity to a halt, hurting businesses and causing people to lose their

jobs.

“This is a truly global crisis as no country is spared,” Gita Gopinath, the IMF’s chief

economist, wrote in a blog post earlier this month.

Here are seven charts that show how the coronavirus pandemic has hit the global economy.

Rise in unemployment

Many economists have warned that lockdown measures around the world will accelerate job

losses — that’s already showing up in unemployment numbers in several economies.

In the U.S., the world’s largest economy, more than 26 million jobs were lost over the last five

weeks. The country’s unemployment rate of 4.4% in March was the highest since August 2017,

according to the Bureau of Labor Statistics.  

The U.S. is not alone in dealing with rising unemployment. Australia and South Korea also

registered an uptick in unemployment rates, with some economists warning that the situation

could become worse.

Services industry hit hard

the U.S. and China — two of the world’s largest economies and consumer markets

But both countries reported sharp declines in retail sales as lockdown measures during the

pandemic forced many stores to shut and kept consumers at home. A surge in online sales

reported by some retailers, such as Amazon, failed to stem the overall fall.  

Economists warned that consumers may not resume spending even after lockdown measures are

lifted. That’s evident in the “slow improvement” in retail sales in China even after the country

allowed a gradual reopening of businesses, said analysts from Oxford Economics.

“The slow improvement in household spending underpins our view that, globally, consumers are

unlikely to rush back to the shops as soon as restrictions are lifted,” they wrote in a report.

A broader hit to the services industry has been observed globally, with businesses in the

transportation, real estate, and travel and tourism sectors experiencing some of the largest

declines in activity so far, according to IHS Markit.

Slump in manufacturing activity

Manufacturers, already weighed down by the U.S.-China trade war in the last two years, have

once again come under pressure as the coronavirus spreads around the world

The Covid-19 pandemic first hit manufacturers outside China that rely on factories in the Asian

economic giant for materials and parts — also known as “intermediate goods” — to make their

own products. But Chinese factories suspended operations for longer than expected as authorities

worked to contain the virus.

As more countries impose lockdown measures, a greater number of manufacturing firms were

hit. Some were forced to temporarily shut down, while those that remain open faced restrictions

in getting their supply of intermediate goods and materials.

face. As a result, factories across the U.S. to Europe and Asia have reported declines in output

over the past month.

Another bad year for trade

Global trade, which was already slowing in 2019, is expected to be weighed down further this

year.

The World Trade Organization, in its latest forecast this month, said global trade volume could

plummet by 12.9% or 31.9% this year — depending on the trajectory of the global economy.

“Under both scenarios, all regions will suffer double-digit declines in exports and imports in

2020,” the WTO said.

Global economy to shrink in 2020

The coronavirus pandemic’s hit to economic activity has led many institutions to slash their

forecasts for the global economy.

The International Monetary Fund, whose assessment of the economy is widely followed, expects

the global economy to shrink by 3% this year. Only a handful of economies — such as China

and India — are expected to grow in 2020, IMF said.

While the fund has penciled in a rebound of 5.8% growth next year, it said that recovery is “only

partial as the level of economic activity is projected to remain below the level we had projected

for 2021, before the virus hit.”

“The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be

around 9 trillion dollars, greater than the economies of Japan and Germany, combined,”

Gopinath, the fund’s chief economist, wrote. 

Its spread has left businesses around the world counting costs and

wondering what recovery could look like.

economic impact of the virus so far.

Global shares in flux

Big shifts in stock markets, where shares in companies are bought and sold, can affect the value

of pensions or individual savings accounts (ISAs).

The FTSE, Dow Jones Industrial Average and the Nikkei all saw huge falls as the number of

Covid-19 cases grew.

The Dow and the FTSE saw their biggest quarterly drops in the first three months of the year

since 1987.

In response, central banks in many countries, including the UK, slashed interest rates. That

should, in theory, make borrowing cheaper and encourage spending to boost the economy.

Global markets have since recovered some ground as governments have intervened. But some

analysts have warned that they could be volatile until fears of a second wave of the pandemic are

eased.

More people seeking work

Many people have lost their jobs or seen their incomes cut due to the coronavirus crisis.

Unemployment rates have increased across major economies as a result.

In the United States, the proportion of people out of work has hit 10.4%, according to the

International Monetary Fund (IMF), signalling an end to a decade of expansion for one of the

world's largest economies.

Millions of workers have also been put on government-supported job retention schemes as parts

of the economy, such as tourism or hospitality, came to a standstill under lockdown.

However, the data differs between countries. France, Germany and Italy provide figures on

applications, for example, whereas the UK counts workers currently enrolled in the scheme.
But there have since been some signs of recovery in the global jobs market.

China and France, for example, have seen increases in hiring rates as shutdowns eased,

according to networking platform LinkedIn.

Some experts have warned, however, it could be years before levels of employment return to

those seen before the pandemic.

Risk of recession

If the economy is growing, that generally means more wealth and more new jobs.

It's measured by looking at the percentage change in gross domestic product, or the value of

goods and services produced, typically over three months or a year.

But the IMF says that the global economy will shrink by 3% this year. It described the decline as

the worst since the Great Depression of the 1930s.

Although it said that the coronavirus has plunged the world into a "crisis like no other", it does

expect global growth to rise to 5.8% next year if the pandemic fades in the second half of 2020.

That's driven primarily by growth in countries such as India and China.

Recovery in big, services-reliant, economies that have been hit hard by the outbreak, such as the

UK or Italy, is expected to be a slow process.

Travel among hardest hit

The travel industry has been badly damaged, with airlines cutting flights and customers

cancelling business trips and holidays.

Many countries introduced travel restrictions to try to contain the virus.

Data from the flight tracking service Flight Radar 24 shows that the number of flights globally

took a huge hit in 2020.

But as the spread of infections has eased in some areas, the industry has started to open back up.
Spain, for example, has reopened its borders to visitors from most of Europe without having

to quarantine. For months it was under one of Europe's toughest lockdowns.

Travel companies also said that bookings from the UK had "exploded" after the government

announced current restrictions will be eased.

Oil price recovery

Demand for oil all but dried up as lockdowns across the world kept people inside.

The crude oil price had already been affected by a row between Opec, the group of oil producers,

and Russia. Coronavirus drove the price down further.

Brent crude is the benchmark used by Europe and the rest of the world. Its price dipped below

$20, to the lowest level seen in 18 years.

Prices have recently regained ground as travel restrictions in some countries have been relaxed,

boosting demand for fuel.

Consumer confidence

Retail footfall also saw unprecedented lows as shoppers stayed at home in a bid to stop the

spread of Covid-19.

Pedestrian numbers have since risen as lockdown measures have been rolled back, according to

research firm ShopperTrak,

Separate research suggests that consumers might still be feeling

anxious about their return to stores.

More than half of UK customers expect they will now go shopping less often over the next one

or two years, according to a survey of more than 1,000 people by accountancy giant EY.

Vaccine hopes

Governments around the world have pledged billions of dollars for a Covid-19 vaccine and

treatment options.
A number of pharmaceutical firms are in a race to develop and test potential drugs that could

help nations get back to "normal".

Shares in some companies have shot up on the hopes that some will be approved and distributed

at scale.

AstraZeneca's share price, for example, has hit record highs. The Drug company says it will

be able to produce two billion doses of a vaccine.

"Until such medical interventions become available, no country is safe," the IMF said of the

pandemic that has disrupted the global economy.