COVID -19 has become a most devastation pandemic in the history of human civilization. Almost 1.5 million people already died for the reason of this pandemic. Public health sectors in all over the world have been facing a severe debacle since the initial stage of this pandemic. At first this pandemic has been identified in Wuhan province in China. After that Chinese government enforced severe lockdown in the affected area of China. Within a short time this pandemic spread almost all over the world. At the first phase of COVID -19 pandemic most of the countries in the world enforced strict limitation on people movement and enforced severe lockdown. It is fact that economic consequence of COVID -19 is more severe than public health. Almost all countries in the world have been facing a severe setback for the reason of this pandemic. Economy in most of the countries has been facing a severe recession for the reason of COVID -19 pandemic.GDP and export volume in most of the countries are decreasing day by day. Hundreds of million people have been fallen in the trap of extreme poverty for losing the means of their livelihood. Governments of the most of the countries declared hundreds of billions dollar bail out for saving the livelihood and continuing the economic activities of their own countries. But for because of this pandemic people already reduced their movement in the public spaces and all type of education institutions have already become paralyzed, most of the business community people have already faced huge loss because of the long term forced lockdown for the greater interest of the public health. It is the most severe pandemic after Second World War. This is why governments of the most of the countries have been adapting austerity measures for saving the economy of the countries.
Condition of global economy before COVID -19:
Since the initial stage of globalization economic transaction in most of the countries in the world has growing up rapidly. Hundreds of millions people uplifted from the vicious circle of the poverty. The financial depression in 2008 exposed the vulnerability of the most of the developed and developing countries in the world. During the time of this depression economy of the western countries faced severe debacles. Governments of these countries declared hundreds of billion dollar bailout for rescuing the different financial institutions of these countries. But the matter of fact that economy of the western countries did not show sound strength for the reason of the inner difficulties. Renowned western economist Joseph Stieglitz showed that,” decade from (2008-2017) , the United States grew an average of 1.55 percent annually and .8 percent per capital, while the Euro zone grew only at 0.7 and 0.4 respectively.
Altogether, at the end of 2017, about 17.8 million people in the Eurozone – roughly equivalent to the populations of Austria and Bulgaria combined were out of work. The unemployment rates for people under 25 and job seekers without upper- secondary education, as well as the European average – 18.5 percent and 17 percent receptively. Election in 2016 and 2017 , notable in Poland , Spain, the Netherlands , France and Britain demonstrated that European leaders can no longer assume broad citizen support for the EU. It is also true that GDP – debt ratio are growing very rapidly in many European countries during the last three decade.
Italy, Greece, Portugal may be thrown into a crisis, given it’s already high debt to GDP ratio of 135, 177and 117 percent respectively.
It is also true that most of the developing countries in Asia, Africa and Latin America may fall into a deep crisis for it’s growing GDP -debt ratio. Most of the developed and developing countries in the world have been immersing into high debt during the last three decades. Economy of USA has already also plunged into high debt for various reasons. Economy of the many Middle Eastern countries are also facing severe crisis for the reason of civil war and others internal and external factors. It is also fact that ongoing economic conflict between USA and China has become a big threat for global economy.
Short brief on last two great depressions:
The duration of the greatest depression of the last century was 1929 to 1933. War, lack of trust among the great powers, unplanned economy, gambling in securities and shares are responsible for the greatest depression in the 20th century. During this period a hundreds of million people became jobless in all over the world.
This table will help to understand the severity of this depression:
(The figures represent millions of gold dollars and they are for the first three months of each year)
|First quarter of||Imports||Exports||Imports & Exports|
These figures reflected the severity of greatest depression of the 20th century.
First depression of the twenty first century:
The general economic crisis that was unleashed across the world in 2008 is a Great Depression. The mortgage crisis in the US was only the immediate trigger. The underlying problem was that the fall in interest rates and the rise in debt which fuelled the boom had reached their limits. The International Monetary Fund estimated that large U.S and European banks lost more than$1 trillion on toxic assets and from bad loans from January 2007 to September 2009. The economic crisis started in the U.S but spread to the rest of the world. For the reason of this depression bailouts came in the form of trillions of dollars of loans , asset purchases , guarantees and direct spending. In spite of various initiatives of the national governments and International Monetary Institutions millions of people lost their job in many developed and developing countries.
Possibility of major financial depression as a potential aftermath of COVID- 19 on global economy: COVID -19 is one of the most severe pandemic in the history of human civilization. Almost 1.5 million people already died for the reason of this pandemic. Global trade and commerce have become partially stagnant for the reason of this pandemic. Governments of different countries have declared trillions of dollar bailout package for saving the life and livelihood of the people. Between April and June 2020, the International Labor Organization estimated that an equivalent of 400 million full- time jobs were lost across the world, and income earned by workers globally fell 10 percent in the first nine month of 2020, equivalent to a loss of over US $ 3.5 trillion. The economic loss of COVID – 19 may already exceeded of this prediction at the ending month of 2020.
It is also true that most of the economic trends in this age of globalization and post modern societies may push this crisis in a severe stage. Such as tendency of consumerism, higher GDP – debt ratio in most of the developed and developing countries, domination of unplanned economy, institutional fragility, economic conflict between USA and CHINA, socio- political unrest and integration problem and conflict may push the ongoing economic depression in a severe stage. For the reason of COVID -19 duration of ongoing economic depression may continue at least 5 to 10 years. This crisis may severely hit the virtuous flow of import and export and remittance in most of the developed and developing countries and create problem on socio -economic structure.