- To curb the spread of the coronavirus, authorities around the world implemented lockdown measures that have brought much of global economic activity to a halt.
- Many businesses have been forced to reduce operations or shut down, and an increasing number of people are expected to lose their jobs.
- Companies in the services industry, a major source of growth to many economies, were among the hardest hit in the coronavirus pandemic.
- Manufacturers have also been hit, and world trade volume could once again plummet this year.
To stem further spread of the virus, authorities around the world implemented measures to lock down countries and cities to varying degrees. That includes closing borders, shutting schools and workplaces, and limiting large gatherings.
Those restrictions, which the International Monetary Fund called the “Great Lockdown,” brought much of global economic activity to a halt, hurting businesses and causing people to lose their jobs.
Here are five points that show how the coronavirus pandemic has hit the global economy.
Rise in unemployment
Many economists have warned that lockdown measures around the world will accelerate job losses — that’s already showing up in unemployment numbers in several economies.
Services industry hit hard
The services industry is a major source of growth and employment for many countries.
Countries reported sharp declines in retail sales as lockdown measures during the pandemic forced many stores to shut and kept consumers at home. A surge in online sales reported by some retailers, such as Amazon, failed to stem the overall fall.
Economists warned that consumers may not resume spending even after lockdown measures are lifted. That’s evident in the “slow improvement” in retail sales in China even after the country allowed a gradual reopening of businesses, said analysts from Oxford Economics.
Slump in manufacturing activity
Manufacturers, have once again come under pressure as the coronavirus spreads around the world. As more countries impose lockdown measures, a greater number of manufacturing firms were hit. Some were forced to temporarily shut down, while those that remain open faced restrictions in getting their supply of intermediate goods and materials.
Another bad year for trade
Global trade, which was already slowing in 2019, is expected to be weighed down further this year.
Global economy to shrink in 2020
The coronavirus pandemic’s hit to economic activity has led many institutions to slash their forecasts for the global economy.
“The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around 9 trillion dollars, greater than the economies of Japan and Germany, combined.