World economy and COVID 19

Updated: Nov 19, 2020

Millions of people are under lockdown since the pandemic started. It has not killed in hundreds but thousands in some countries and on top of that the economy of the world is trembling.

UK has just announced that her economy will shrink by 35% due to this lockdown. China’s GDP plunged from 9 to 6 (a record low) during lockdown and still struggling. The USA, after one million people, got affected and 60,000 deaths, people are protesting about the fall of their economy. Their reason is not unjust if they say that they may die of COVID rather than poverty.

India is struggling too as she has extended her lockdown to the 18th of May. Singapore has extended the lockdown till June after 2nd surge of coronavirus.

South Africa and other African countries are stressed with the lockdown, as for many people social distancing is impossible and seems to be a luxury rather than a need; as their living conditions are very poor i.e. sharing communal toilets and living in very crowded neighborhoods etc.

Hardest hit businesses are airlines and travel industry. The cruises owners have never had experienced anything like that before.

The airline industry has lost $880 billion due to this pandemic. Nearly all countries have travel advisory in place and were not encouraging any non-essential travels. They are doing this even before the WHO has officially declared it a Pandemic. Due to this there is a 71% loss in flight capacity as of 17th Feb 2020 around the Lunar year from China as compared to 2019 Lunar year. Hong Kong has an 81% reduction as of 16 of March in their flight Capacity compared to the previous year. Italy has seen 22% drops when she went into lockdown on the 9th of March 2020. 40% of the airlines impacted by the European travel ban are USA based and they are on the verge of bankruptcy if not bailed out by their governments. 

Due to the closure of schools, and colleges governments around the world are losing a lot of cash. They are now slowly and carefully reopening, like some primary schools and KG in Israel started to reopen, so that their parents may go to work.

The small businesses are besieged too, like restaurants, diners, pet shops, hairdressers, etc. In some states of the USA, like Georgia and Texas, they are easing off the restrictions despite government warnings. The reason is simple, they are getting broke and they desperately need customers.

The Olympics has already been postponed to 2021. On the whole the pandemic will cost the world economy around one to three trillion in losses just this year and maybe more in the coming years. The world economists are predicting that the economy will recover with the reopening slowly, but if the 2nd wave hit then it will dip again. since the start of the epidemic in China, economists have forecasted some decline in the economy, as China is the main manufacturer and producer of the world’s goods, but after pandemic and lockdown almost everywhere in the world, the economy is shrinking. The world economist is projecting some bounce back as businesses are going to reopen this year after the growth had plunged in the first two quarters which will make the shape of V in the Q3 and Q4  due to fiscal and monetary stimulus of about 10 trillion dollars. It may take the shape of U, where the recovery is slow and may take a couple of quarters after reopening, since it is likely that impact lies deeper than predicated. Double–dip, a W shape for economic recovery is also foreseen because of the boost activity unemployment and many corporate bankruptcies or likely new cases of viruses reemerging.  The  L shaped curve can be seen when growth plunges and doesn’t recover for sometimes as if virus keeps us under lockdown, but very unlikely to happens according to them and may hit emerging markets that are less able to engage big stimulus and often rely on community exports. Chief economist like Gilles Moes of AXA investment group predicting a swoosh, which imply that the rebound would be soft, like a tick (2021).

Due to these economic losses, many people have already lost their jobs, or staying at home, because the company can’t generate enough revenue. This happens with Cathay Pacific Airlines, who asked their air hostesses, at the start of the epidemic in China, to stay at home. On the 17th of April, it has laid off 286 cabin crew based in the United States and furlough 201 pilots based in Australia and Britain, as the pandemic has virtually halted the global travel. Some airlines are merging to save business. 

Unemployment and job losses will be huge. After the lockdown in the USA, there is an increase in unemployment from 3.5% to 4.4%. Many businesses like bars and restaurants are laying off people due to no income. Even in health sectors, like dentists and physicians, people are being sacked due to fewer patients or no procedures at the clinics. The labor department of the USA reported on Friday (3rd April) that the payrolls plunged by 701,000, marking the first decline since 2010 and the worst fall since March 2009. Layoffs and unemployment made March 2020 one of the worst months for USA employment in the modern era. 

On March 23rd the IMF Managing Director Kristalina Georgieva made clear while addressing the conference call with G-20 finance ministers and central bank Governors, that this is the moment of solidarity and all countries have to play their role to sustain the world economy.

She further added that the economy is going in negative and we will not see any improvement till 2021. She praised the extraordinary fiscal action taken by certain countries to boost their health systems and firms as well as the central banks for easing the monetary policy. She urged the investors not to remove the money from emerging markets as they already are doing, which is worth $83 billion. IMF is particularly concerned for low-income countries in debt crisis and they are working closely with the World Bank. 80 countries have already asked for financial support from them. They are standing by to loan all their lending capacity of 1 Trillion dollars. In addition to this they are asked by low and middle-income countries for SDR (Special Drawing Rights) allocation, which IMF has done during the Global Financial Crisis. Major Banks have initiated their swap lines with emerging markets. In addition to this, they try to replenish the Catastrophe Containment and Relief Trust for the poorest countries. In the end she pledges to all the countries operational with IMF to work together, because “we all are in it together”, she said. 

Many celebrities have donated for COVID 19. Lady Gaga, like others, have gathered money to raise charity for coronavirus, while others have given a lot. I managed to assemble a list to show my gratitude to them. 

Beyoncé and Twitter CEO Jack Dorsey have donated $6m (£4.9m) to the coronavirus relief effort. George and Amal Clooney have contributed more than $1m (£803,000). The Irish rock band has donated 10 million euros (£8.7m) to buy personal protective equipment (PPE) for front line staff in Ireland. The Hollywood actress and humanitarian Angelina Jolie has provided $1m (£843,000) to fight child hunger during the outbreak of COVID-19. 

Rihanna along with her Clara Lionel Foundation (CLF) has donated $5m (£4.2m) towards organizations in the US and around the world. Blake Lively and Ryan Reynolds have contributed $1m to help provide food for older people and low-income families. Roger Federer, the tennis star, and his wife Mirka have donated 1 million Swiss Francs (£861,000) "for the most vulnerable families" in Switzerland. Taylor Swift, the singer, appears to have turned Fairy Godmother to fans affected by the pandemic, sending donations to those in need.

Arnold Schwarzenegger, the former California governor and Hollywood actor has pledged $1m towards the coronavirus relief effort. Again Lady Gaga and the beauty brand HAUS is donating a percentage of profits to support food banks.

Gwyneth Paltrow, the Oscar-winner, and her husband Brad Falchuk have reportedly donated $100,000 to help health workers. James McAvoy, the X-Men actor, has donated £275,000 to the “Masks For NHS Heroes” campaign to provide protective equipment for staff, according to its founders.

Many of the celebrities are entertaining us during these lockdowns. For example, Brad Pitt coming on SNL from his home as Dr. Anthony Stephen Fauci (Trump White House Coronavirus task force since Jan 2020). Tom Hanks has donated his plasma, after recovering from COVID 19, so it can be used for the patients.

Celebrities in India have donated and trying to collect money via their respective charities. Some of them are keeping their fans entertained by posting videos on social media, like Anupam Kher, Madurai Dixit Naine, etc.

Many people are working from home during the lockdown.  College students and school kids are having lessons online. The best of the internet systems are overwhelmed by the huge numbers of people using it at once. As colleges are making sure that no student lags during that, therefore, they have opened up easy access to online libraries. Many students are organizing funds for their fellow students, who can’t afford the pressures of lockdown, such as to buy laptops, high-speed internet, etc.  Some of the students relay free meals to people and making sure they get them.

We all have to fight the coronavirus and its effects on the economy through kindness, understanding, and proper management. No government has a magic wand to fix such a thing, but we can reduce the suffering by helping others in need.

This is not the time to blame each other but try to work out a solution. The kindness is the utmost tool we humans have against COVID 19. Try to come out of our comfort zones and reach to others in this crisis. Nobody has a quick fix to the economy, but humanity can triumph if we try. We should put our differences aside as nations and individuals and try to address the crisis at hand.

The Earth is testing our limits, I think this is our only chance; we will be given no more. People are arguing that we will come out of it as we had in the past, like Spanish flu; but this time the stakes are higher because of climate change, overpopulation, and uneven distribution of resources, we are suffocating ourselves slowly. Earth can sustain millions of more years, but can we as species? We have to prove our worth to Mother Earth by uniting against the virus not by sacrificing her lands, oceans, and other species. Hopefully the vaccine is on way at the end of this year but do many people have the chance by then? If we get out of this crisis, will we learn something out of it or keep giving a deaf ear.

Dinosaurs and many species go extinct, what chance do we have among all odds. The answers lay in our hands. We have to start respecting our Mother just by doing anything as small as skipping a meal a day, or having one or no kids at all, going to office by foot, by bike, or by public transport.

Please give me feedback lest I have said too much.

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