EconomyOnline – Mahsa Nejati; According to CNBC, the outbreak of Covid-19 pandemic has plunged the global economy into one of the worst recessions in history, and it is unclear when full recovery will occur.
Recent advances in vaccine development have raised hopes for the economic outlook, but some economists have suggested that offering it in developed countries could hamper a return to pre-epidemic activity.
Even among developed economies, re-quarantine in Europe to delay the rise of the disease could delay economic recovery, economists say.
Severe decrease in activity
The rapid outbreak of Covid-19, first seen in China, forced many countries to apply months of quarantine by 2020, which significantly reduced economic activity.
As a result, GDP, the broadest measure of activity, was low in many of the world’s economies.
The International Monetary Fund predicts that the global economy will experience a 4.4 percent decline this year, before reaching 5.2 percent growth in 2021. The International Monetary Fund said the global economy began to recover in October, but warned that the path to a pre-epidemic level was long, uneven and uncertain.
Travel restrictions remain in place
One of the hallmarks of coronavirus quarantines around the world has been the complete or partial closure of borders, resulting in the cessation of many international trips.
As of November 1, more than 150 countries have reduced travel restrictions related to Covid-19, according to the United Nations World Tourism Organization. However, many restrictions remain in place to reduce border crossings, including:
Open borders only for travelers with specific nationalities or destinations.
Requirement to submit a negative Covid-19 test before being allowed to enter the country.
Request quarantine of passengers as soon as they enter the country.
The main consequence of the recession caused by this epidemic has been an increase in global job losses.
In some countries, the early effects of Covid-19 on the labor market were 10 times greater than in the first months of the 2008 global financial crisis, the Organization for Economic Co-operation and Development (OECD) said.
Vulnerable workers have suffered the most. Low-wage workers were more at risk of contracting the coronavirus to provide essential services during quarantine. These people have also experienced the highest level of unemployment or income loss.
Increasing government debt
Governments have increased their spending to protect jobs and protect workers. The International Monetary Fund reported in October that worldwide, government measures to prevent the economic impact of the epidemic had reached $ 12 trillion.
These staggering costs have pushed global public debt to the highest level, but the fund said governments should not withdraw their funding too soon.
According to the International Monetary Fund, however, many workers are still unemployed, small businesses are being challenged, and 80 to 90 million people will be severely impoverished by 2020 due to the pandemic, even after additional social assistance. ; And that’s why it’s too early for governments to cut back on their support.
Central banks have taken action
Central banks also support the economy by lowering interest rates, which help governments manage their debts.
The US Federal Reserve, whose policy affects the global economy, cut interest rates to zero and pledged not to raise them until inflation exceeds its 2% target.
Central banks in developed economies, including the Federal Reserve and the European Central Bank, have also increased their purchases of assets to inject more money into the financial system.