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After the fifth: The impact of the Coronavirus on the economy could last for decades

After the fifth: The impact of the Coronavirus on the economy could last for decades

The decline in global GDP last year was the largest since the Great Depression (Photo: Reuters / Carla Karnell)

Like some people who have recovered from it Covid-19 It has symptoms in the long run. It has become clear that the same will happen with the global economy once the V-shaped recovery this year loses momentum.

although $ 26 trillion at Support during a crisis The arrival of vaccines has led to a faster recovery than many expected, and a shaken legacy of education, job destruction, wartime debt levels, and growing disparities between races, genders and geographies will leave permanent scars, most of them in poor countries.

“It’s very easy after a stressful year or more to get really comfortable getting things back on track,” said Velor Arthi of the University of California, Irvine, who studies the long-term impact on health and the economy of past crises. Of which. “But many of the effects that we see historically last for decades, and are not easily resolved.”

Dropp off Start Last year was the largest since the Great Depression. The International Labor Organization estimates that the effect is wiped out Equivalent 255 million official jobs. Researchers at the Pew Research Center say the global middle class has shrunk for the first time since the 1990s.

Trade shut down due to the coronavirus pandemic
“It will take time to return to the pre-Covid standard,” said Carmen Reinhart, Senior Economist at the World Bank. (Photo: Agência Brasil / Tânia Rego)

Costs will be distributed unevenly. An analysis of 31 measures from 162 countries prepared by it Oxford Economics She highlighted the Philippines, Peru, Colombia and Spain as the economies most vulnerable to long-term scars. Australia, Japan, Norway, Germany and Switzerland were the best.

Said Carmen Reinhart, chief economist at World Bank. The consequences of COVID-19 will not be reversed in many countries. far from it.”

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Not all countries will be affected equally. The International Monetary Fund believes that advanced economies will be less affected by the Coronavirus this year and beyond, while low-income countries and emerging markets will suffer more. In contrast to 2009, when the rich countries were the hardest hit.

The US GDP forecast next year is higher than expected before Covid-19, driven by billions of dollars in stimulus. Nevertheless, the forecast International Monetary Fund Few of the scars left from the epidemic are visible in the world’s largest economy.

Corona virus United States of America
“People’s tastes could really change, and in that case there would be more transitional unemployment,” says Adam Posen, president of the Peterson Institute for International Economics. (Image: REUTERS / Brendan McDermid / File Photo)

After the V

The way in which consumer confidence and spending patterns will be affected by continued concern for health and the labor market may be one of the most important economic legacies of the crisis, just as the Great Depression of the 1930s increased savings. This is a risk, although many people have saved more money in the past year.

“There is a real doubt about how much people’s behavior has changed regarding consumption patterns as a result of this crisis,” said Adam Posen, president of the Peterson Institute for International Economics.

“If people return to eat in restaurants, go on leisure trips, and play sports in gyms, many of these sectors will be reborn. But it is also possible for people’s tastes to change in real terms, in which case there will be more transitional unemployment.” There is no good government solution for that. “