COVID-19 - Effect on the Economy
The coronavirus pandemic has infected people in 188 countries. Its spread has not only affected peoples’ health but also businesses around the world, making them wonder what the recovery could look like.
The shock of the coronavirus pandemic has caused a severe contraction of the world’s economy. According to World Bank forecasts, the world’s economy will shrink by 5.2% by the end of 2020 as virtually every nation’s economy is experiencing a recession. If the pandemic continues, it could lead to the deepest economic recession since WW2.
Sure, working from home due to quarantine can be a gift from the heavens for some but for most, more hours at home, where office rules don’t apply, lead to a decline in productivity. Some outright lost their jobs and income due to firms not having enough money to support employees or completely closing down. Together, these circumstances have resulted in a decrease in aggregate supply and if supply decreases, prices for goods tend to increase and that’s the complete opposite of what we as consumers want. Furthermore, if prices rise, we as consumers will switch our priorities to buying necessities rather than luxuries as we would like to save more during these uncertain times. This means that the dining, travel, and entertainment industries were severely affected due to COVID-19.
There are also fluctuations in oil prices due to a reduction in oil-requiring economic activities caused by the pandemic. If oil prices continue to drop, it can cause a reduction in trade, generated revenue, and investments for oil-exporting countries. If you want more information on the impacts and causes for the oil price fall, you can click the link below this post or visit our blog page.
However, there is still calm in the storm that is COVID-19. The online entertainment industry has been flourishing recently due to an average increase in web activity per person. Social distancing and increasing unemployment have presented the internet as a last resort for many to cure their boredom. This increased traffic has increased the revenues of many IT companies. Industries specializing in medicine and sanitization are also making a good profit since sanitizers, gloves and masks are now parts of our day-to-day lives. There was one more industry, something to do with toilets and paper, that had so much demand for it that supply couldn’t keep up.
In conclusion, we should face the fact that COVID, as much as we want it to disappear, isn’t going away anytime soon and would most likely continue to negatively impact most industries in the following months if not years. This does leave many wondering how long it will actually take for this to be all over.
Written by Aidana Assylbek; edited by Anuar Burkitbayev and Alexey Dudarev.
