What is the impact of the Corona virus on the world economy?

• Rabab Ahmed
• 07/17/2020
• 820
• 3,219

The world is watching, watching the new developments from the Corona virus, after its infiltration into 80 countries, and the fear of the Chinese virus has spread to concern about the Chinese giant being affected economically, which affects the global economy. 

The global economy is operating in a state of uncertainty since late 2019, as this year carried a new type of challenge for the economy, which is the challenge of facing a health crisis, which is the Corona virus crisis, which differs in nature from previous crises that the economy faced in terms of severity of impact and speed of transmission And the inability to limit its spread, the global economy has been affected more by the 2008 financial crisis. 

Facing the Corona epidemic represents one of the unique challenges of the economy, because it is difficult to determine the delinquent impact of it because of the difference in the spot spread throughout the world and the unpredictable period of time, and the difficulty of predicting its end, as it is widespread and threatens not only a limited geographical area but The whole world, and if it spreads in a specific region, it will lead to its spread in all regions and there will be difficulty in avoiding it, and thus causing complete paralysis in all state facilities, and thus this will affect the rate of growth in the local product, the rate of inflation and the rate of unemployment. 

The impact of the Corona virus on the global economic indicators:

The Covid- 19 pandemic prompted the world to face a new financial crisis with a greater impact than the financial crisis of 2008, as it brought the global economy into a severe recession [1], because the rapid spread of the Corona virus represented a painful blow to the global economy that had begun to witness A state of minor recovery and recovery from the previous financial crisis, as this crisis will give impetus to some of the changes that have occurred in the global economy, and the damage depends on the speed and effectiveness of government policy to contain the infection. 

UNCTAD indicated that there has been a slowdown in the growth rate of the global economy to more than 2% for this year, which could cost the global economy about a trillion dollars, contrary to what was expected in September 2019, meaning that the world is on the threshold of a severe global economic recession 

How the Corona virus caused a global economic recession:

In light of the accelerating pace of the spread of the Corona virus, individuals resorted to staying in their homes to prevent the spread of infection between them and thus its transmission to the rest of the countries, this has led to a marked decline in consumption, and the services sector - such as tourism and restaurants alongside small factories - was severely affected, in addition to Low asset prices, weak aggregate demand, an increased debt crisis, and an increased income distribution gap, which have led to a loss of consumer and investor confidence, which is the most direct consequence of the spread of the virus and thus to enter into a downward spiral of decline. It is difficult to predict the movement of markets, which makes the global situation worse and foreshadow a wave of severe recession. 

The most affected countries are the oil exporting countries as well as the commodity exporting countries, these countries will lose more than 1% of their growth, in addition to those that have strong economic relations with countries that will be affected a lot by the economic shock, and countries like Canada, Mexico, Central America, and eastern and southern countries will Asia and the European Union slowed growth, ranging from 0.7% - 0.9%. Likewise, those with strong financial ties with China may be more likely to be affected by the Corona crisis on its economy.

Reducing the disastrous effects of Corona on the global economy: 

UNCTAD asserts that the belief in the soundness of the economic fundamentals and the global economy that corrects itself are two things that hinder political thinking in advanced economies, and this belief will impede the most daring political interventions, necessary to prevent the threat of a more serious crisis, and increases the chances that repeated shocks will cause damage Serious economic in the future.

UNCTAD indicated that central banks could not solve the crisis alone, but that a series of policy responses and institutional reforms are needed to prevent domestic health dismay in the food market in central China from turning into a global economic meltdown.

In order to address these concerns,governments must spend at this stage to prevent a collapse that could cause more damage than expected to occur during this year, and the UNCTAD official called on the United States, which oversees presidential elections, to take measures that exceed mere tax cuts and Benefits, while in Europe, whose countries saw a decline in the economy in late 2019, the decline is expected to prevail in the coming months. 

Expected recovery in the year 2021: 

China is not a criterion for the rest of the countries, as the time required smoothing the curve varies greatly from one country to another, especially since several regions have not reached the peak yet. Epidemiologists are trying to reach reliable predictions about the spread of the virus, which represent the data on which economists depend. Research by Oxford Economics expects to ease restrictions in the second quarter and start recovery in the third. According to the institute, the recovery is expected to lead to a sharp V- shaped boom in the charts, as well as loosen constraints that have a direct impact on market consumption. Projections indicate that the tourism sector in the United Arab Emirates will witness a significant recovery by the year 2021, and it is expected that global GDP levels will return to the same level before the emerging Corona virus, by the same year.