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(Gloucestercitynews.net)(August 19, 2020)--It may not be easy to measure the economic impact of the pandemic in absolute terms, but there is no denying it is going to take quite a toll on the global economy. The earlier predictions, set before the virus was a global phenomenon, suggested that multiple leading economies would be down at least 2.4% of GDP value in 2020 and had already lowered their predictions for 2020 from 3.0%. To be more precise, the global GDP in 2019 was expected to be $86.6 trillion and a drop of just 0.4% in growth means a loss of $3.5 trillion. However, these were pre-COVID-19 predictions when social distancing was not yet set in place.

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Afterwards, the virus outbreak caused a colossal dent in the global stock markets. Dow Jones slipped nearly 3,000 points on March 16, 2020, in one day. Before this dip, the lowest recorded figure was 2,300 points, which continued for four days.

The cause of global economic damage by Benjamin Gordon of Palm Beach

The economic experts point out that the shrinking demand is the main reason behind the economic downturn. Consumers are no longer buying goods and services. For a clearer assessment of the impact, you can look at the travel and tourism industry. Countries have imposed travel restrictions to help flatten the virus's curve, making it impossible to book business or leisure trips. This has in turn affected the airlines' revenue which means they will have to cut costs by limiting operations and laying off staff. The same goes for other sectors as well. For example, with no vacations or social events, daily commutes have drastically gone down. This effect is also evident in both the oil and automobile sectors.

The current situation is leading companies towards opting for furloughing and terminating jobs to deal with revenue loss. This condition turns even grimmer when those who become unemployed won’t be able to afford regular goods and services. As an example, you can consider the retail scene. Job cuts affect sales as shops remain closed, which then continues to challenge the online retail market. This compound effect makes economists, governments, and businesses worry that the global recession from the COVID-19 pandemic could get as unfortunate as the Great Depression.

A ray of hope for the recovery of the global economy

While the disruption is not over, as the virus continues wreaking havoc, some successful entrepreneurs such as Benjamin Gordon of Palm Beach believe that there are chances to avoid the worst. After tackling previous crises, governments are aware that they can manage recession led by drastic falls in demand with grants and relief packages. Many governments have announced monetary assistance will be provided to citizens as well as businesses. For companies, access to these funds means they won’t have to cut off jobs.

The unique coronavirus situation can also be advantageous for some industries including healthcare, food retail, and e-commerce. These sectors can contribute at least some growth to the disease. More importantly, we have reason for optimism as this crisis will eventually have an end. Once eradicated, all types of restrictions will slowly phase out. The movement will then resume to normal once the vaccine is out. Going by this, there is still a chance that the global economy will jump as soon as the pandemic ends.

In the context of recovery, there are some factors that cannot be overlooked. For instance, due to decreased demands, the supply of goods and services can continue to be low, leading to price raises and mid-term deficiencies. However, the responsive government and improved situations can eventually take the edge off of these apocalyptic predictions. To be more detailed, policymakers must take charge of crises in the health and economic fields. There has to be a complete reformation plan for both short and long term, focusing on the main economic growth engines after the disaster. 

When talking about policies, it should encompass bolstering healthcare services and providing stimulus support for boosting growth in the private sector. The citizens should also get access to funds. During lockdown periods, every country has to sustain economic activities to support businesses, essential services providers, along with households. The mutual coordination and synergy between global countries on these measures can curb the damage of the pandemic. At the same time, a sound global recovery can occur along with the possibility of still attaining public health goals.

It can be difficult to imagine something positive coming out of this situation, however, you will hopefully see an improved and growing world economy with global leaderships committed to their people, businesses, and humanity in general. Therefore, it only makes sense to be patience and look forward to this growth.