The Economic Consequences of COVID-19
The COVID-19 pandemic has affected all aspects of life in some respect. Our modern society was built on a foundation of constant contact and communication, much of which have been disrupted by the measures implemented to combat COVID-19. Many countries across the globe have enacted things like social distancing, curfews, travel bans, and lockdowns to reduce the spread of the virus, but how has this impacted the economy?
Rise in Unemployment Worldwide
One of the first noticeable economic impacts of the COVID-19 pandemic was a stark rise in unemployment. Without a steady stream of consumers, many businesses simply could not afford to keep their regular staff. Naturally, as many in the public lost their jobs, a greater fall in consumerism followed. Unemployment skyrocketed across many countries after enduring only a few months of the pandemic. Although unemployment has since seen a gradual decline as some businesses are able to resume operations, this has undoubtedly left a mark on the economy. Consumers are now more cautious with their spending, and are likely still under certain social distancing measures, so it may be some time before this aspect of the economy recovers.
Going hand in hand with the international rise in unemployment, as well as the disruption of global supply chains brought on by the COVID-19 pandemic, many countries now sit on the brink of recession. This risk will likely raise as the pandemic continues and economic hardships cumulate. However, it has been predicted that the global economy may have a relatively quick recovery, if the pandemic subsides in the next few months.
Particular Industries Affected Differently
It’s no surprise that different industries have faced different challenges during the pandemic. While a few were able to quickly adapt and appropriately handle the economic downturn, many did not enjoy the same privileges. Among those affected by the COVID-19 pandemic, a few stand out and give important insights into the current economy.
Minor Tech Boom
Although it is a small and isolated boom, certain tech companies have actually managed to grow during the pandemic. Namely those involved in health technologies and remote communications, their growth is directly linked to the needs that arose after the outbreak and the enactment of social distancing measures. Many companies and offices sought to continue their operations remotely, therefore they increased their expenditure on remote technologies and IT support. Other tech companies, such as those working with medical professional or the healthcare industry, saw growth through the increased attention and dependency on their products.
Oil Price Fluctuations
As manufacturing and transportation dropped during the COVID-19 pandemic, the demand for oil was also dramatically reduced. While manufacturing suffered through a lack of demand and social distancing measures enacted in factories, transportation was affected by stay at home measures and travel bans. This in return caused oil demand to plummet, and even incited a price war between Russia and Saudi Arabia. This price fluctuation can have widespread negative effects for oil producing countries.
Service & Travel Industries in Danger
Lastly, the service and travel industries have struggled to stay afloat during the COVID-19 pandemic. This is a more obvious effect of stay at home and social distancing measures, however it is nevertheless important to note. Many restaurants, tourist attractions, and other businesses have been forced to close, sometimes permanently. This loss of jobs and economic productivity will have lasting effects on the global economy as it recovers from the pandemic, and may even cause a prolonged recovery process.