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Question:
COVID-19 pandemic has gravely wounded the world economy with serious
consequences impactng all communites and individuals. Moving rapidly
across borders, along the principal arteries of the global economy, the spread
of the virus has benefted from the underlying interconnectedness – and
frailtes – of globalizaaton, catapultng a global health crisis into a global
economic shock that has hit the most vulnerable the hardest. Conduct a
research on Economic impact of Coronavirus Covid-19 pandemic on trade and
development of the world economies.
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Acknowledgements
Firstly I would like to thank my father for providing me the basic knowledge
and helping me understand the diferent sectors of economics for the project. I
would also like thank my economics educator Ms. Sarika Aggarwal for such an
intriguing project and guidance. I would also like to thank google and various
other search engines for helping me connect with informaton and at last my
mother for staying awake with me while I did the project.
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INTRODUCTION
The COVID-19 pandemic is primarily a health crisis, but it has become clear
that it has ramifcatons that extend to many aspects of the internatonal
order. Internatonal trade is especially hard hit; global merchandise trade
recorded its largest ever one-period decline in the second quarter of 2020,
falling 14·3% compared with the previous period. But frstly let us get a quick
overview on what exactly is this fatgue virus.
Coronavirus disease (COVID-19) is an infectous disease caused by a newly
discovered coronavirus.
Most people infected with the COVID-19 virus will experience mild to
moderate respiratory illness and recover without requiring special treatment.
Older people, and those with underlying medical problems like cardiovascular
disease, diabetes, chronic respiratory disease, and cancer are more likely to
develop serious illness.
The best way to prevent and slow down transmission is to be well informed
about the COVID-19 virus, the disease it causes and how it spreads. Protect
yourself and others from infecton by washing your hands or using an alcohol
based rub frequently and not touching your face.
The COVID-19 virus spreads primarily through droplets of saliva or discharge
from the nose when an infected person coughs or sneezaes, so it’s important
that you also practce respiratory etquetes.
This deadly virus has been in our lives for approximately 1 year, it restricted all
of us from going outside our homes, working properly, trading, development
and more. Though, the virus afected several sectors, the economic sector took
quiet a blow.
Although there has since been a partal rebound as lockdowns eased during
summer in the northern hemisphere, total global merchandise trade for 2020
is forecast to fall by 9·2% in 2020, and a recovery to the pre-crisis trend is
unlikely for several years. These changes to the global trading landscape have
wide-ranging consequences for physical and mental health, as they afect
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supplies of drugs and medical equipment, nutriton and food security, and
government income necessary to pay for health services.
To understand the possible health consequences of this evolving situaton and
how best to respond, it is frst necessary to understand the reasons why trade
is declining. Although most economic shocks are precipitated either by
reductons in demand (eg, due to bank failures and income losses) or supply
(eg, with sudden increases in prices and rising producton costs), COVID-19 has
created both situatons simultaneously. For example, by April 24, 2020, more
than 80 countries and customs territories had introduced export prohibitons
or restrictons as an immediate response to the pandemic.
In a world characterised by integrated and ofen just-in-tme manufacturing
processes, these actons caused marked reductons in the supply of
manufactured goods, initally in China, but then elsewhere. Labour shortages
at ports, caused by the pandemic, further slowed the movement of goods.
Meanwhile, workplace closures in many countries and subsequent wage losses
reduced demand for retail goods and traded services. Many of these trends are
expected to contnue as further lockdowns are introduced in response to
second waves of infectons.
Since the outbreak of the coronavirus disease of 2019, more than 1 million
people have lost their lives due to the pandemic, and the global economy is
expected to contract by a staggering 4.3 per cent in 2020. Millions of jobs have
already been lost, millions of livelihoods are at risk, and an estmated
additonal 130 million people will be living in extreme poverty if the crisis
persists. These are the grim consequences and the immense challenges and
human sufering caused by this pandemic. Nor is an end to COVID-19 yet in
sight. In many countries, the number of new COVID-19 cases is rising at an
alarming rate and, for many, a second wave is already an unwelcome reality.
Much uncertainty remains about how and when the pandemic will run its
course, but the unprecedented economic shock generated by the global
health emergency has already sharply exposed the global economy’s
pre-existng weaknesses, severely setng back development progress
around the world. While nearly all spheres of life have been afected by
the pandemic and the resultng socioeconomic impacts, the focus of this
report is on the pandemic’s massive consequences for trade and
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development. This report will focus on lost connecton of trade and
reduced development in both big and small scale economic sectors.
Coming against a backdrop of already fragile economic conditons.
The pandemic has created disruptons on an unprecedented scale and
uncovered the vulnerability of many already disadvantaged households
and sectors. COVID-19 has spurred on a number of already visible
trends, magnifying some obstacles to development, but has also opened
up new opportunites for trade and development. In this report,
selected aspects of a “new normal” are discussed, as well as how COVID-
19 may be a game changer for several persistent and emerging trade
and development challenges in areas. It will also highlight the planning
and executon of the government policies and measures taken to help
the economy recover. In frst part of the report I will be focusing on, the
fnancial conditons of people due to covid-19.
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Financial efects of
covid-19
COVID-19 is not only a global pandemic and public health crisis; it
has also severely afected the global economy and fnancial
markets. Signifcant reductons in income, a rise in unemployment,
and disruptons in the transportaton, service, and manufacturing
industries are among the consequences of the disease mitgaton
measures that have been implemented in many countries. It has
become clear that most governments in the world underestmated
the risks of rapid COVID-19 spread and were mostly reactve in their
crisis response. As disease outbreaks are not likely to disappear in
the near future, proactve internatonal actons are required to not
only save lives but also protect economic prosperity. In this report
we will look upon three major fnancial damages occurred due to
covid-19
1. Financial efects of covid-19 on small scale businesses:
The COVID-19 pandemic has profoundly afected the small business sector. A
previous JPMC Insttute report provided estmates of the impact during the
inital weeks afer a natonal emergency was declared on March 13, 2020 and
as many states issued stay-at-home orders that restricted many businesses.
The loss of fnance is not just not caused only in light of these restrictons but
also as consumers cut their spending and shifed some of it online while some
businesses temporarily closed. While cash balances rebounded, bolstered by
pandemic-related relief programs, revenues in May remained materially lower
than they were a year ago.
This report provides a closer look at the small businesses afected by COVID-19
and the ensuing economic downturn, focusing on the industries as well as the
industries that have been hardest hit, identfed as the restaurant, retail, and
personal services industries as the most severely afected at the onset of
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COVID-19 The fnancial impact across the sector. These businesses are more
fnancially fragile, with lower revenues and less cash liquidity than other rich
large-scale businesses.
We examine changes in small business cash balances, revenues, and expenses
through May 2020 using a de-identfed sample of nearly 1.3 million small frms
natonwide. This sample is based on the anonymizaed transactons of deposit
accounts and represents both non-employee and employer frms, mostly in
urban areas. The vast majority—over 80 percent—of small businesses are
none-employers, which is refected in our sample. In additon, we used a de-
identfed sample of small frms matched to owner race data obtained from
publicly available voter registraton records. Out of the states in which
race/ethnicity data is collected in voter registraton records, Chase had a
footprint in three as of 2018: Florida, Georgia, and Louisiana. For this subset of
92,000 small businesses in those three states, we can provide insight on the
diferental impact of COVID-19 on White-, Black-, and Hispanic-owned small
businesses.
Together, cash balances, revenues, and expenses provide a summary of
small business fnancial health. Balances provide the liquidity frms need,
especially when they experience an adverse shock. Operatng cash fows
—revenues and expenses—indicate the amount of business actvity,
which may be refected in cash balances. However, cash balances are not
simply the result of net changes in revenues and expenses: business
owners may also transfer personal assets or secure other fnancing to
replenish their balances.
Based on administratve data from bank accounts, my fndings
complement studies based on survey data and provide additonal
insights. In partcular, provide estmates of the efect of the pandemic on
small business fnancial outcomes. It is not surprising that small
businesses are enduring hardship, but these data quantfy the magnitude
and variaton of the efects and inform policymakers of the industries and
demographic groups which were more deeply impacted. For these small
businesses, recovery may be even more challenging than it already is.
2. Impact of covid- 19 in unorganizaed labour: informal/unorganizaed
labour are some of those communites that took a blow from the
pandemic. Informally employed workers in the unorganised
sector, sufered wage losses amountng to ₹63,553 Crore (₹635.53
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billion). How much did the unorganised sector lose? The report
estmates that 40 lakh and 6.94 crore informally employed
workers were at risk of job loss during lockdown.
3. Financial efects on the biggest economy: COVID-19 is having a
massive efect on the US Economy, i.e the biggest economy in the
world. Even if it is not felt yet on everyone’s household budgets.
From cancellaton of sportng events and religious gathers to the
closing of travel between the US and other countries,
internatonal trade is being severely the Americans take pride in
themselves being the biggest economy and the right example of
democratc government, they are going to see over the next few
months and year how interconnected they are economically to
countries around the world. As the importaton of goods from
Europe comes to a practcal standstll and products made in Asia
diminish from retail shelves every day, Americans will have fewer
choices for purchasing their consumer goods.
While this seems like a boon to American Made brands, fewer consumer goods
being sold means fewer purchases, which means lower business profts,
which in turn means less income to hire and pay employees. With this
basic understand of the chain reacton that leads from lower trade to
smaller or fewer pay checks, you can generally expect a slowdown in the
US economic to last more than a month or two. Many Economist expect
the fnancial efects of the COVID-19 pandemic to cause greater
economic stress in the US than even the housing crisis and Great
Recession of the late 2000s.
Although, Because the US and world’s general economic situaton was overall
quite healthy before the novel coronavirus outbreak in the fall of 2019,
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recovery should eventually be less painful than it otherwise could have
been. However, they should also expect the fallout from the pandemic
to afect Americans directly and personally in their wallet.
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Global supply chains
Global supply chains are networks that can span across multple contnents
and countries for the purpose of sourcing and supplying goods and
services. Global supply chains involve the fow of informaton, processes
and resources across the globe. Global supply chains are important
because it:
Provides the product in right quality and quantty.
provides the product on the exact locaton.
delivers the product in suitable tme and money.
Decreases Purchasing Cost – Retailers depend on supply chains to
quickly deliver expensive products to avoid holding costly inventories in
stores any longer than necessary.
Decreases Producton Cost – Manufacturers depend on supply chains to
reliably deliver materials to assembly plants to avoid material shortages
that would shut down producton.
Decreases Total Supply Chain Cost – Manufacturers and retailers depend
on supply chain managers to design networks that meet customer
service goals at the least total cost. Efcient supply chains enable a frm
to be more compettve in the market place.
During the covid-19 pandemic, many global supply chains have been cut of.
This resulted in heavy loss of fnance, chaotc and unorganised work and a fall
back in the development of the sector.
Around the world, many companies are hugely reliant on producton and supplies
in China, Southeast Asia and other low-cost jurisdictons. In recent years, broad
global developments have forced these companies to rethink their supply chains
and their stability and reliability for an uncertain future. This is not just in relaton
to COVID-19 but many other externalites and government actons through the
world, which have begun impactng supply chains, such as the increased risk of
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trade wars, trends of natonalism and protectonism, issues of sustainability and
human rights consideratons.
The overall impact of the outbreak and the resultng emergency measures on
internatonal trade resultng from COVID-19 remain to be seen. However, it is
clear companies have been faced with substantal business and operatonal
disruptons, which has included everything from mitgatng the efects of reduced
supply, to managing disruptons to logistcs suppliers, and indeed hurdles in
meetng their own contractual obligatons to customers.
COVID-19 has presented a unique situaton in which to observe how these various
systems and processes respond to acute severe stress and change. It has also
shone a spotlight on the importance of investng in supply chain resilience to build
stronger long-term operatons. As we move into the future, it is vital to use what
has been learned from recent events to prepare for the future.
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Fall in global growth
Economic growth is an increase in the producton of economic goods and
services, compared from one period of tme to another. Traditonally,
aggregate economic growth is measured in terms of gross natonal product
(GNP) or gross domestc product (GDP), although alternatve metrics are
sometmes used.
More than 80 countries have closed their borders from transitoning countries,
ordered businesses to close, instructed their populatons to self-quarantne,
and closed schools to an estmated 1.5 billion children. The world’s top ten
economies such as the United States, China, Japan, Germany, United Kingdom,
France, India, Italy, Brazail, and Canada stand on the verge of complete collapse.
In additon, stock markets around the world have been pounded, and tax
revenue sources have fallen of a clif. The epidemic due to infecton is having a
notceable impact on global economic development. It is estmated that by
now the virus could exceed global economic growth by more than 2.0% per
month if the current situaton persists. Global trade may also fall from 13 to
32% depending on the depth and extent of the global growth slowdown. The
full impact will not be known untl the efects of the epidemic occurred.
The COVID-19 pandemic has spread with alarming speed, infectng millions and
bringing economic actvity to a near-standstll as countries imposed tght
restrictons on movement to halt the spread of the virus. As the health and
human toll grows, the economic damage is already evident and represents the
largest economic shock the world has experienced in decades.
The June 2020 Global Economic Prospects describes both the immediate and
near-term outlook for the impact of the pandemic and the long-term damage
it has dealt to prospects for growth. The baseline forecast envisions a 5.2
percent contracton in global GDP in 2020, using market exchange rate weights
—the deepest global recession in decades, despite the extraordinary eforts of
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governments to counter the downturn with fscal and monetary policy support.
Over the longer horizaon, the deep recessions triggered by the pandemic are
expected to leave lastng scars through lower investment, an erosion of human
capital through lost work and schooling, and fragmentaton of global trade and
supply linkages.
The crisis highlights the need for urgent acton to cushion the pandemic’s
health and economic consequences, protect vulnerable populatons, and set
the stage for a lastng recovery. For emerging market and developing
countries, many of which face dauntng vulnerabilites, it is critcal to
strengthen public health systems, address the challenges posed by informality,
and implement reforms that will support strong and sustainable growth once
the health crisis abates.
The crises have taught everyone the interdependence of trade and economy
on our neighbouring places and also, how the growth can be slowed down if
the global chain breaks.
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Socioeconomic issues
Social economics, also known as socioeconomics, is the social science
and branch of economics that studies the interrelaton between
economic actvity and social behaviour. Social economics analyses
how the economy is afected by social norms, ethics, sentments, and
other factors.
Socio-economic issues are factors that have negatve infuence on an
individuals' economic actvity including: lack of educaton, cultural
and religious discriminaton, overpopulaton, unemployment and
corrupton.
1. Educaton: A total of 1.725 billion students globally had been
afected by the closure of schools and higher educaton
insttutons in response to the COVID-19 pandemic. According
to the UNESCO Monitoring Report, 192 countries had
implemented natonwide closures, afectng about 99% of the
world's student populaton. Amidst the wake of the global crisis
on account of the COVID-19 pandemic in 2020, the educatonal
sector was massively impacted. With educatonal insttutons
shut for an indefnite period, uncertainty loomed large amongst
learners as well as educators. However, eLearning app
development came to the rescue by providing smart solutons
that ushered in myriad remote learning methodologies. The
year 2020 has witnessed the emergence of innovatve
eLearning solutons to satsfy the challenging requirement of
the educatonal sector. These smart learning technologies have
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transformed the learning methodology altogether. Digital
learning is the new normal.
2. Healthcare: The COVID-19 crisis is drawing atenton to the
already overburdened public health systems in many countries,
and to the challenges faced in recruitng, deploying, retaining
and protectng sufcient well-trained, supported and motvated
health workers. It highlights the strong need for sustainable
investment in health systems, including in the health
workforce, and for decent working conditons, training and
equipment, especially in relaton to personal protectve
equipment and occupatonal safety. Social dialogue is essental
to building resilient health systems, and therefore has a critcal
role both in crisis response and in building a future that is
prepared for health emergencies.
Unemployment: India is stll not out of the woods as far as
unemployment is concerned afer a year when the lockdown
was imposed to contain the spread of deadly COVID-19 on
March 25 last year as pandemic-induced job loss has not
tapered of consistently.
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The government had imposed a lockdown to curb the spread of
the pandemic but this impacted economic and commercial
actvites and resulted in job loss and later on the exodus of
migrant workers which rocked the entre naton.
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Is covid-19 the turning point?
Now comes the main queston, is covid-19 the changing point
for economy? Based on my report and extra research I can say
that, coronavirus and the lockdown caused due it will defnitely
afect the economy and to us as individuals for long tme.
Although we cannot out a fnger on if it is the biggest change
though, one thing is for sure that lose and degraded
development and growth will take years to heal. COVID-19
pandemic was an inevitable result of globalizaaton and that the
pandemic, in turn, had seriously threatened the world’s
globalizaaton. The pandemic had disrupted the internatonal
legal order: legally, socially, politcally, and economically. The
future will prove if the covid—19.
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Conclusion
In the end I would like to conclude that although the pandemic
was a shock for all of us and it blew away some other than
others, the biggest lose we faced was the lose of life. I give my
heartelt condoles to those who lost a loved one. I believe that
if we all fght this virus together as we will be stronger. I
request everyone to follow necessary precautons and most
Importantly not lose hope. As the renowned writer J.K Rowling
once said “We are only as strong as we are united, as weak as we are
divided”. This shall to pass but tll the tme I give my utmost wishes and
strength to everyone in need. Thankyou
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