Global economy in 2020: Pandemic impact shown through 5 charts

After a decade of exemplary growth, the global economy was staring a slow down when ushering 2020. Experts were hoping to enter tumultuous waters, but no one was expecting the worst recession, the world has faced in a century. Two months into 2020, the pandemic started spreading like wildfire and by the end of March the world economy was completely paralyzed ridden by nationwide lockdowns.

April onwards, for almost one full quarter economic activity was minimal – business and productivity came to a grinding halt, while the deadly virus ravaged lives and livelihoods simultaneously. The last quarter of 2020 witnessed some recovery, but the dent was so deep, a full economic revival is estimated to take about 2-3 years.

While the discovery of Covid-19 vaccines brightened up the economic outlook, it is projected that the sluggish rollout of the vaccine in developing nations might impede the return of economic activity to pre-Covid levels. Moreover, in Europe many countries were experiencing a second and more severe wave of the pandemic, once again curbing activities and delaying the potential economic recovery.

The good news is that according to a CNBC article, economists have predicted a much-improved global economy in 2021, simply because it is not hard to outperform 2020. As we hope for a better 2021, lets glance back at the devastating impact of the pandemic as demonstrated through 5 charts.

Steep drop in GDP

When the pandemic reared its ugly head, national economies had to stop all activities for an extended period. This impacted the domestic activities directly, and many economies recorded unprecedented lows in their GDP. The International Monetary Fund has forecasted that the global economy will shrink 4.4% in 2020, before rising to 5.2% in 2021, while the experts also warned of a “long, uneven and uncertain” return to pre-Covid levels.

Travel restrictions still in place

Due to the contagious nature of the pandemic, international travel restrictions kicked in since March. Although many restrictions were lifted or relaxed later in the year, travel is far from returning to pre-Covid levels. Many restrictions that are still in place include allowing only specific travelers, admitting only those who test negative for the virus and having self-isolation or quarantine measures in place.

Increase in job loss

The economic slump created by the pandemic resulted in increasing job losses globally. According to the Organization for Economic Co-operation and Development, in some regions of the world the labor markets were ten times more affected than the initial months of 2008 global recession. Further the agency reported that economically most vulnerable people had to bear the worst brunt of the crisis, not only in terms of job and income loss but also in terms of exposure to the virus.

Rise in government debts

Governments across the globe had to rescue their people and cushion the effect of the economic losses caused by the pandemic. IMF stated in October that support and relief packages announced by governments globally totaled $12 trillion. Such exaggerated levels of spending pushed global public debt to unforeseen heights.

Central banks have stepped in

Central banks have stood by the government in extending support to the economy by lowering interest rates, which is expected to help governments in managing their debts. The Federal Reserve of the US, which is a benchmark globally brought down their interest rates to almost zero, while central banks in advanced and developing economies also increased their asset buying in order to amplify liquidity in the financial system.

Source and infographics: CNBC

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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