Effects of COVID-19 on the Global Economy

COVID-19 had a tremendous impact on different spheres of life, including the economy. The disease became a pervasive problem for the countries, no matter how strong their economies were. There are a few primary ways in which the pandemic was able to impact the economic sphere.

1. Supply chain disruption -> market disruption

During the pre-pandemic times, a lot of world companies and businesses relied on input from China. However, after the outbreak of COVID-19 in Wuhan, a Chinese city where the disease was first discovered, a lot of manufacturing firms were coerced to switch their sourcing, which was a hard task for many. Then, the pattern began to spread in other countries; and the supply problem became pervasive, concerning many world companies that used to get their sourcing from foreign countries. The lack of sourcing affected the financial markets of countries. This, undoubtedly, became one of the economic problems caused by the pandemic.

The data shows that in the US, imports and exports during 2020 experienced a steep drop but then gradually recovered. This sudden change caused many businesses to take action or even close.

2. Impact on production

As was noted before, COVID had a significant impact on the supply chain, which ultimately led to the decreases in production. During the outbreaks, a lot of countries experienced a lack of basic supplies on the stores’ shelves. Citizens were devastated and bought in bulk as much as they could. The economy suffered, import rates dropped, and stores were near to be absolutely empty.

3. Financial impact

Uncertainty of the pandemic created a prosperous atmosphere for the disruption of the financial markets. For instance, a sudden change occurred in the Facebook equity price (see the statistics below). Such changes became problems for investors and traders, as the financial market was experiencing a lot of ups and downs during times of obscurity.

Also, as the companies began to cut their workforce during the pandemic, more and more people became unemployed, which led to financial problems within society.

Those were just several general examples of how the COVID-19 pandemic impacted the global economy. The effect was and continues to be much broader. With all its negative consequences and impacts, COVID is a good example of what might happen to the economy during a pandemic.