The great tightrope of global economy
The COVID-19 pandemic is here to stay, at least in the short term, and the already damaged global economy will be even worse if a second wave of infections occurs before the end of the year and drastic quarantine measures will be required again, paralyzing some businesses that have been reopening after 3 desperate months of confinement.
The Organisation for Economic Co-operation and Development (OECD) has given its outlook on the situation in the coming months, revealing that the economy will drop by -6% this year and that it could fall by as much as -7.6% if the infection curve rises in countries that have recovered satisfactorily and keep the health situation at bay.
Positive figures are predicted for 2021, although recovery will be very slow and the impact of COVID-19 could affect the global financial sector for a long time and disproportionately.
If the progressive recovery that has been taking place in various economic sectors continues, without variations or changes due to the growing effects of the virus, GDP will be particularly affected by a slow recovery.
Although sectors such as tourism, entertainment centres, restaurants, accommodation, inns, air and sea transport will not return to normal activity as they did pre-quarantine, they will be in a precarious situation if a second outbreak occurs.
Any business or economic activity that requires crowds of people will be in decline as they are reactivated. Today, their financial situation is facing a tightrope, because they are not profiting sufficiently to keep their services running.
The OECD states that “the Covid-19 has been the worst health and economic crisis since the Second World War. Economic impacts are dire everywhere.”
Worldwide governments today can create some prevention policy for unexpected events that may occur in the next decade, they can create a sustainable economic strategy and improve competitiveness, spending and social protection, support a little more small and medium entrepreneurs by giving them full confidence that they will be able to perform a great financial activity.
Will the economy emerge from the crisis caused by the pandemic?
Although the reasons are totally different, the current crisis with high levels of unemployment and collapsing companies is similar to that of 2008, which was caused by bad decisions made on Wall Street. Financial aid will wreak havoc on nearby governments, because it is no longer the same situation of doing bad things in order to fix mistakes, it is now a natural scenario that can get out of control and get worse at any moment.
A large part of the world’s population has lost their savings during the long months they have been in confinement, replenishing products has become a chaos because people do not have access to shops with accessible prices and their expenses have risen in internet services, electricity, water or rent, and many of their incomes came from companies that are not qualified as a priority for the reactivation of the economy.
The world has been hit with this health crisis and there is no way to combat it because there is no vaccine in sight, all sectors have been drastically hit and governments have prepared plans to help revive finances and get the economy back on track, only to gradually return to normal by adopting biosecurity measures for a long time.
