Economic Impact of Corona (COVID-19) [Updated 2021]

The world is alarmed by the outbreak of pandemic coronavirus, also known as COVID-19, which started from China. All the nations have some serious concern regarding the virus and the impact it has on the health of people and on the world economy. Now, most of the countries are facing the second and third variant of Nobel Corona virus, which is considered more dangerous than its first variant.

COVID-19: The current scenario

The first patient with the symptoms of COVID-19 was reported on December 12, 2019 in Wuhan China. On January 11, 2020, COVID-19 took the first life in Wuhan. By the mid-January of 2020, coronavirus spread all around the world. Japan, South Korea, Thailand, U.S. Vietnam, Singapore, Taiwan and many more had the confirmed cases. As of May 9, 2021, there are 158,403,733  confirmed cases across the world and death count is 3,298,916. COVID-19 is declared as a pandemic disease, which means people do not have immunity for the disease or are easily transferable.

The growing global presence of COVID-19 and the damaging consequences from viruses have raised economic concerns. The actual impact of COVID-19 in the world economy is yet to assess. China is among the largest players in the world. It has established as the world’s largest manufacturing hub with a global manufacturing output share of 28.4% in 2018. This dominance of China in the world economy is one of the crucial reasons for the economic fallout of the ongoing COVID-19 crisis facing across the globe.

The COVID-19 crisis in China has impacted the major world players in almost all sectors. All the countries across the world have some direct concerns from COVID-19. For instance, health and related consequences, irrational behavior from the panic etc.. And some indirect concerns such as mobility ban, border lockdown, trade restrictions etc. Bank of America has cut the market forecast admitting that the coronavirus outbreak has meaningfully impacted fundamentals.

COVID-19: The Demand-side

“Demand Shock” is the major problem due to the COVID-19 crisis. Most of the countries have already faced the Demand Shock situation and many other countries are preparing themselves to tackle the situation of a demand shock. Demand Shock is a sudden event that increases or decreases the demand for goods or services temporarily. COVID-19 has already caused the ‘Oil Demand Shock’ i.e. oil prices have jumped more than 4% as per Organization of the Petroleum Exporting Countries.

On the other hand, the demand is likely to fall due to reduced mobility and heightened uncertainty. The governments around the world have shut down all the public places and gathering to prevent the transmission of the virus. Apart from social life, this decision of the government has impacted the country’s economy. All the affected economies have locked down their internal and external mobilization apart from very essential have been called off. 

COVID-19: Impact on Employment

The Organization of Economic Cooperation and Development has warned that the shock from the virus is already bigger than the global financial crisis. Employment market is likely to face a struggling and sluggish phase across the world. Most of the countries such as India, France, Italy, U.K. are already facing the problems of unemployment. India has maintained the unemployment rate over 8% in April 2021. Similarly, U.K. has this figure of 4.9% for April 2021. Meanwhile, the U.S. labor market shows some recovery in unemployment rate when compared to the statistics of last year.

COVID-19: Global Market

The IMF suggested that the coronavirus recession could be worse than the 2009 recession.  Most of the countries that are facing either no growth or negative growth. The United Nations Conference on Trade and Development(UNCTAD), an UN trade agency, has warned of global growth below 2% counting the loss of more than $1 trillion in the world economy. COVID-19 has a similar impact on the global stock market. Dow Jones Industrial Average has shown the dip of 19 percent, FTSE has decreased by 14.3% and Nikkei has decreased by 22.9 % since January 2020. In India, Sensex dropped by 10% since the outburst of second wave of COVID-19 in April 2021, leading the stock market to crash situation.

Most of the fortune-500 companies have huge investments in China. Apple Inc. has 75% of the supplies come from China . Most of the Apple’s suppliers are already operating at around 30% to 50% capacity. Similar is the situation for all other dominant companies. Similarly, India is the world’s fifth-largest economy and it has decided to lockdown for more than a month. India has the trade deficit is around $15.24 billion in April 2021, which is a recovering figure. The UNCTAD has expected manufacturing disruption in China would result in a decrease in $50 billion export across global value chains. European Union, the United States, Japan, South Korea, Taiwan, China, Vietnam etc. are some of the most affected economies.

COVID-19: The Vaccine War

It is more than a year since the pandemic. The early phase of pandemic passed without any vaccine for the COVID-19. All the companies were trying to understand the Nobel corona virus and its nature. Now, almost after a year, countries have researched, tested and developed their own vaccine. Despite various contenders for vaccine developers, different countries have recommended and approved different vaccines considering the nature and variant of Nobel corona virus. Companies from Russia, UK, U.S., India are making household name in COVID vaccine fight. Some of leading vaccine and vaccine providers are:

  1. Pfizer-BioNTech by US with 95% efficacy*
  2. Moderma by US with 95% efficacy*
  3. AstraZeneca by University of Oxford with over 70% efficacy*
  4. Johnson & Johnson by US with over 72% efficacy*
  5. Sputnik V by Russia with 91.4% efficacy*
  6. Sinovac Biotech by Brazil with 50.38%-91.25% efficacy*
  7. Novavax by UK with 89.3% efficacy*
  8. CanSino Biologics by China with 90.98% efficacy*
  9. Bharat Biotech by India with 70-78% efficacy* *defined condition

All these above mentioned vaccine are already in action through various phases of vaccination in different countries. The level of production of these vaccination and the demand of these vaccination has been a major ground for vaccine-war. The second variant of Corona virus is more dangerous and is aggressively spreading across the world. An article in Harvard Business Review quote that with the current economic model of vaccine manufacturing and supply, it is not likely that wide immunization across the globe until the end of 2022.

In India alone, only 11.5% of the population has been vaccinated through first and second phase of vaccination. As of April 2021, only 6% of the total population in Australia has been vaccinated. In US, this figure is around 32.8%. More than half population of UK has already received the first dose of vaccination.

COVID-19: Isolation and Action

Most of the economists and world leaders have predicted the impact of COVID-19 to be more than any physical, geo-political war. All the affected and impacted economies are still struggling to restrict the infected and death toll. The actual social, health and economic impact of the virus is yet to assess. Social distancing, self-isolation and quarantine are some of the practices to avoid the spread of COVID-19. Indian Council for Medical Research has released a statement saying that quarantining of at least 50 percent symptomatic cases of COVID-19 within the three days developing symptoms.

COVID-19 is a world crisis and every individual should be responsible for overcoming this crisis. 


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