The alarming rate and speed of infection of the coronavirus pandemic brought worldwide economies to a near standstill. Mandatory business restrictions and physical movement were intended to stop the virus, sabotaging economic performance in every country.
The World Bank recently released new reports describing the possible implications of the pandemic, including its immediate and long-term impact. The forecast reveals an estimated 5.2% global GDP contraction this year, the deepest recession average experienced by the world in decades.
The Basis Point reports on relevant issues about the efforts of every country as they try to curb the economic downturn brought by COVID-19. Almost every nation affected by the pandemic has implemented fiscal and other monetary policies to support government efforts in sustaining their economies.
But the question lies with how long the crisis will last and how much weight it will put on every country’s health and finances. Here’s what experts believe.
The World is Already Experiencing Recession
Recent economic meltdowns have been brought by financial causes and not a public health crisis. The effects of the COVID-19 virus prove to be a crucial factor that puts the world economy at a standstill if not curbed in the next couple of months.
Several countries, including the United States, have opted to open their economies because of fear of a market crash. And this is still while the pandemic is plaguing most of its cities, particularly the north-eastern states.
Choosing their citizen’s lives over country-wide GDP performance is hard for governments as both rely on each other. It is a choice between families not having enough to sustain their everyday living or risking the lives of workers to bring in such amounts needed.
Small Businesses are Highly Vulnerable Sectors
Almost every country is plagued not just with issues on how to flatten the health crisis, but two other remarkable issues. One is how to open their economies and how to get back and shape their worsened treasuries.
COVID-19 did not deplete the coffers of every country, but it has significantly impacted businesses and particularly small and emerging entrepreneurship. Businesses that rely on every day sales to pay for rent and other essentials would suddenly face closure because of health mandates and rising prices.
Additionally, governments around the world have to impose better taxation to relieve the economic stress brought by the pandemic. This move would increase the likelihood of small businesses going bankrupt, particularly in developing and third-world countries hit by the virus.
Swift Recovery is Possible
The Basis Point has been following up on the possibilities that economic recovery is highly likely for almost all countries though it is difficult to predict. With scientific research and the medical industry working hand-in-hand to bring the pandemic to an end, the world will see economic restoration as the next target.
Forging a “new normal” is a relevant step towards preventing this type of viral infection. It means businesses and public services would have to modify their offerings to suit health protocol enforced by governing bodies.
Nonetheless, how each country would react to global changes would mean the difference to each one. Worldwide market recovery is likely to be swift and intense as people open up to a new and systematic world where health issues, damaging economies are taken into perspective.