The worldwide extent and impact of the Covid-19 epidemic are unprecedented, offering tremendous challenges in analyzing its direct and indirect consequences on international economics..
Trang 1COVID-19 CRISIS
& GLOBAL ECONOMY
Assignment of International Economics
Đ I N H H O À N G L I N H M A I - 2 0 0 5 0 8 7 8
OVERVIEW
THE
CURRENT
SITUATION
Written by Đinh Hoàng Linh Mai
QH2020-E KTQT CLC 5
On the supply side, not only do infections diminish labor supply and productivity, lockdowns, company closures, and social distancing also lead to a significant supply sources disruption
On the demand side, household consumption and company investment decreased sharply due to layoffs and income loss (from sickness, quarantines, and unemployment), as well as the worsening economic prospects
On March 11, 2020, the World Health Organization (WHO) declared coronavirus (COVID-19) a pandemic, bringing the world's attention to a dangerous reality Since then, the world is still reeling from its aftermath The worldwide extent and impact of the Covid-19 epidemic are unprecedented, offering tremendous challenges in analyzing its direct and indirect consequences on international economics It's a global shock, with supply and demand disruptions occurring simultaneously
in an integrated world economy
The further global challenge is the uncertainty about COVID-19, including the scale and pace of infection; how long and widespread shutdown measures will prove necessary That would lead to a corresponding to when and how international economics would completely recover from the recession
COVID-19 crisis
is one of the current
international economic
challenges
Overview - 1
Analyzation - 2
Recent updates -3
Trang 2Should COVID-19 outbreaks persist, should
restrictions on movement be extended or reintroduced,
or should disruptions to economic activity be
prolonged, the recession could be deeper.
According to the World Bank's World Development Indicators, there is an unprecedented collapse in 2020: global GDP growth fell to -3,6%, even lower than that of 2009 (-1,7%) (Figure 1)
Every region was vulnerable to significant economic slowdowns in the annual GDP growth in 2020 and has not seemed to stop South Asia grew by -6.6%, Sub-Saharan Africa by -2,4%, Middle East and North Africa by -3,7%, Europe and Central Asia by -5.7%, and Latin America and Caribbean by -6,3%, and North America by -3,7% It is clear that South Asia was the most affected
as the virus was claimed to have originated from Wuhan, China
The humanitarian and economic toll imposed by the global crisis on nations with large informal sectors, which account for around one-third of GDP and roughly 70% of total employment
in emerging market and developing economies, is particularly alarming Policymakers must think of new ways
to help these employees to be paid and
to help their companies get financing
in order to save their GDP from any further great drop
COVID-19 also had a significant influence on international trade in a variety of ways Naturally, a greater COVID-19 burden in an exporting nation reduced production size, resulting in a reduction in export supply Exports fell, especially in industries and countries where remote work/operations are scarce The impact of the COVID-19 burden in an importing nation was mainly attributable to a reduction in aggregate demand Reduced demand resulted from lower wages and fewer visits to retail outlets The COVID-19 load in neighboring nations had an impact on a country's foreign trade
ANALYZE THE
CHALLENGE
"The COVID-19 epidemic has sparked a
cross-border economic crisis."
Excessive global volatility can have several
consequences for economic growth Higher
cautious savings, reduced or postponed investment
(because of increased uncertainty and worse
demand expectations), and a higher cost of capital
(due to higher finance costs in a volatile
environment) are among them (Cesa-Bianchi et al
2020) Following the widespread outbreak of
Covid-19, worldwide volatility soared, as it has in prior
periods of the financial crisis
In June 2020, Global Economic Prospects discussed
the pandemic's immediate and near-term effects,
as well as the long-term damage it has caused to
growth prospects By using market exchange rate
weights—the deepest global recession in decades,
the baseline forecasted envisions a 5.2%
contraction in global GDP in 2020, despite the
governments' extraordinary efforts to counter the
downturn with fiscal and monetary policy support
Figure 1 The global GDP growth from 2001 to 2020 (annual %)
Source: World Development Indicators
2009 2020 2001
0
2
-2
4
Trang 3When questioned about the general state of the economy in the months ahead, executives express a more optimistic perspective In the next six months, 79% of respondents anticipate conditions in their home countries to improve, with a majority of respondents
in each area expecting improvements Their worldwide view is even brighter, with 81% expecting gains in the coming months
Finally, respondents believe their own businesses' prospects are improving In the next few months, there would possibly be a rising number of people anticipate their staff numbers to grow, while 74% expect corporate earnings and demand for their products to rise
in the next six months
THE WORLD
IN JUNE 2021
Since the appearance of various
effective vaccines, we can now be
optimistic about the international
economy's recovery.
According to a recent survey carried out by
McKinsey&Company, although the COVID-19
pandemic remains the biggest danger to growth in
respondents' nations, the percentage of executives
who believe so has dropped considerably
Respondents in wealthy economies are likewise
less concerned about the epidemic than they were
in April In comparison to half of their
emerging-market counterparts, 28% of them see the
epidemic as a threat to domestic growth
According to a recent poll, 65% of respondents in
rich nations witnessed epidemic as a threat to their
countries' prosperity
Meanwhile, the percentage of respondents citing
inflation (the second-most-common risk, reported
nearly twice as often as in April) and supply-chain
disruptions have grown Inflation has also climbed
in the ranks as a threat to global economic
development However, reactions suggest that the
epidemic remains a far greater concern than
anything else At the same time, respondents think
supply-chain disruptions are a greater risk to their
businesses' development than in previous polls
When the first COVID
vaccines arrived, people
started talking about the
“light at the end of the
tunnel.”