The Effect of Coronavirus on the Global Economy

Since the emergence of the Coronavirus in the Chinese city of Wuhan at the end of 2019 the coronavirus disease has spread to over 185 countries and territories, infecting more than 2.7 million people and killing over 190,000 globally (Johns Hopkins University).

To minimize the spread of the disease, countries around the world have locked down their respective countries and cities to varying degrees. That includes closing borders, shutting down schools and workplaces, and limiting large gatherings. These restrictions have brought much of global economic activity to a halt, hurting businesses and causing people to lose their jobs.

The deadliest economic impact from the Coronavirus is the loss of jobs. Many economists have warned that lockdown measures around the world will accelerate job losses as seen in several economies. In the U.S., the world’s largest economy, more than 26 million jobs were lost over the last five weeks. However, the U.S. is not alone in dealing with the rising rates of unemployment; Australia and South Korea also registered an uptick in unemployment rates. 

Not only have jobs affected but so has  trade and manufacturing. The World Trade organization estimates that the global trade volume could plummet by 12.9% or 31.9% this year — depending on the trajectory of the global economy. Furthermore, manufacturing is seeing a slump as factories are forced to be shut down, or can’t access the goods needed to make their product due to trade and travel bans. This has led consumers to buy fewer consumer goods, and instead, only focus on items that are needed for survival such as food and water. This furthers the slowdown of the economy as a whole, and unfortunately, the current circumstances indicate no signs that people will start buying again anytime soon. 

All of these factors have resulted in a complete economic shutdown that has begun to degrade the economy. According to Gopinath the IMF’s chief economist, “The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around 9 trillion dollars, greater than the economies of Japan and Germany, combined.” Though the outlook of the crisis may look bleak as we are losing trillions of dollars, the IMPF states that if the crisis ends by 2021, there will be a 5.8% rebound in economic growth for the global economy.