Impact of COVID-19 on the economy across the world
Karin Weller
Posted On June 8, 2020
Covid-19 has disturbed the political, social, economic, religious and financial structures of the whole world. World’s topmost economies such as the US, China, UK, Germany, France, Italy, Japan and many others are affected badly and are on the verge of collapse. The whole world has gone under lockdown in order to flatten the curve.
According to the International Monetary Fund, the global economy is expected to see a loss by over 3% in 2020. Now, as some countries lift restrictions and gradually restart their economies, let’s have a look at how the pandemic has affected them and how they have coped.
Estimated Economic outlook of various countries in percentage (by IMF)
| S.No. | Country | GDP growth in 2019 | GDP growth in 2020 | GDP growth in 2021 |
|---|---|---|---|---|
| 1 | US | 2.3 | 0.7 | 0.9 |
| 2 | UK | 1.4 | 0.3 | -0.3 |
| 3 | Japan | 0.8 | -0.4 | 1.3 |
| 4 | China | 6.1 | 2.4 | 5.9 |
| 5 | India | 5.3 | 5.3 | 6.4 |
| 6 | Australia | 1.8 | 1.2 | 2.3 |
| 7 | Italy | 0.2 | -1.6 | 0.7 |
An overview
In the US, COVID-19-related disturbances have led to millions of citizens filing for unemployment benefits. A report says that since March 21, more than 36 million have filed for unemployment benefits, which is almost a one-fourth of the working-age population. Moreover, an analysis by IMF reveals that the manufacturing output in many countries has steep done, which might result in a fall in external demand and growing expectations of domestic demand.
Global growth
Countries are growing at a rate of -3% in 2020. World’s most flourished economies like the US, Japan, the UK, Germany, France, Italy and Spain are expected to contract this year by 5.9, 5.2, 6.5, 7, 7.2, 9.1 and 8% respectively. Advanced economies have had a major effect, and together they are expected to grow by -6% in 2020. Emerging markets and developing economies are expected to contract by -1%. If China is excluded from this analysis, the growth rate for 2020 is expected to be -2.2%.
In Europe, the GDPs of France, Spain and Italy fell by 21.3, 19.2 and 17.5& respectively. Moving to Asian countries, China’s GDP dropped by 36.6 % in the first quarter of 2020, while South Korea’s output fell by 5.5% since the country didn’t impose a lockdown but followed a strategy of compulsory testing, contact tracing and strict quarantining.
How have countries coped?
According to research conducted by the World Economic Forum (WEF), supporting SMEs and larger businesses is important for maintaining employment and financial stability. Many advanced economies in the world have moved out support packages. While India’s economic stimulus package is 10% of its GDP, Japan’s is 21.1%, followed by the US having 13%, Sweden with 12%, Germany with 10.7%, France with 9.3%, Spain with 7.3%, and Italy with 5.7%.
Asian countries like China, Indonesia (especially in invinia fast boat & karunia jaya fast boat), Japan, Singapore, India, and South Korea account for about 85% of all the Covid-19 cases on the continent. South Korea stands out in the list because business and economic activities were not completely stopped and therefore, their economy was not majorly affected.
As economic activity resumes gradually, the situation will take time to get back to normal, as consumer behaviours change as a result of continued social distancing and indecision about how the coronavirus will evolve.
Summing up
Estimates of the expected recovery in 2021 are not clear yet because the outcomes depend on the duration of the outbreak and the effectiveness of the policy responses. But together, the world can cope through this tough situation.
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