A common theme on news networks, in newspapers and magazines, and even in daily conversation since the beginning of the pandemic has been the impact on the economy. From the immediate closure of businesses and companies to the far-reaching impact of rising inflation and slashed international trade rates, no corner of the global economy has been left untouched by the effects of COVID. As many people talk about the different impacts of the pandemic on the economy, it can be hard to understand what the practical implications of these changes will be for you. This guide will demonstrate what each major impact of the pandemic has been on the global economy and how those changes might affect your life and work.
The pandemic has already sent many countries into a recession as a result of months of stifled work and income and skyrocketing healthcare and infrastructure costs. The United States and the United Kingdom were especially affected, as were Japan, Germany, France, and Russia. The immediate impact of recessions on many countries is spiking levels of unemployment as companies lay off workers to stem financial loss and an increase in bankrupting loans or fiscal instability. If you experienced job loss or missed a few bill payments, that was likely a result of the pandemic. Many economies have since recovered, but a few larger countries, such as the United States and the United Kingdom, continue to struggle in building back economic recovery.
Oil Market Crashes
The oil market is one of the largest sectors of the global economy and fuels everything from gasoline to your electrical bill. Shrinking capital flow, mounting debt, and dwindling labor availability all contributed to an unexpected and unprecedented collapse in the demand for oil, something which subsequently caused oil prices to drop and crashed the oil market. While you may have seen initial benefits in the form of lower gas prices or a slightly reduced utility bill, the long-term impact of the oil market crash affects close to 25 million jobs across the world, and experts are predicting some countries could lose close to 200,000 jobs that can never be recovered.
Food Supply Disruptions
Another surprising outcome of the pandemic’s impacts on the global economy is in food distribution. Many individual countries experienced periods of temporary disruption in food availability, such as a shortage of canned goods, produce, or non-perishable items. Agricultural workers were forced to spoil or throw away thousands of tons of food that they didn’t have the means to harvest or sell even as many community food shelters experienced a huge uptick in donation requests. Trade restrictions and supply chain disruptions are blocking the flow of food supply both nationally and internationally, causing everything from temporary outages to long-term food security issues that take years to repair.
Stock Market Instability
At the start of the pandemic, stock markets around the world immediately bottomed out in response to sudden employment, trade, and resource shifts. Some countries experienced record lows; the United States, for example, reached an economic low rivaled only by the infamous Great Depression that destroyed the country’s economy in the 1930s. Business shutdowns and government control tactics designed to halt the spread of COVID sent international financial markets into turmoil, weakening investor confidence and creating an atmosphere of uncertainty that led many people to sell quickly and cheaply, something that could ultimately cut spending and destabilize monetary values. Stock market instability translates into many businesses cutting employee hours or shrinking benefits as they attempt to cope with less investment capital, and it also means that your cost of living might continue to rise even as your paycheck shrinks.
As the world continues its climb out of the economic pit dug by the recession, markets are slowly but surely stabilizing. Trade restrictions are loosening and some countries are even beginning to allow travel and exports again. As you continue to recover from the initial wave of COVID economic impact, it’s important to remember that the post-pandemic economy is still growing. Only time will tell what permanent impacts might remain.