Consequences of the COVID-19 Outbreak on the Global Economy and the Need got Epidemic Preparedness
COVID-19 cannot be taken merely as a global pandemic and a crisis of public health. The pandemic has caused severe negative influences on the global economy and global financial markets. Notable downsizes in income, improvement in job layoffs, and disorderings in the transportation and related services, and manufacturing industries are among the consequences of pandemic mitigation measures that have been executed in many countries. One of the clearest factors is that most of the countries in the world underrated or miscalculated the risks of high-speed COVID-19 spread and were mostly reactive in their crisis response. As malady outbreaks will not possibly disappear in the near future, dynamic international actions are to be urged to not only to save human lives, but also to protect economic prosperity.
The World Health Organization (WHO) declared COVID-19 as a pandemic on March, 11, 2020. It has been done by pointing to over 3 million pandemic cases and 207.973 deaths in 213 countries. The malady has not only concerned as a public health related crisis, but has also badly affected the global economy.
Notable economic crashes have already happened across the world due to lessened productivity, loss of life, business closedowns, trade disruptions, and decimation of the tourism industry. The pandemic of COVID-19 maybe a red-flag waved for global leaders to strengthen cooperation on wide-ranging preparedness and supply necessary financial backups for a collective international action. Despite of having enough and more information on the expected economic and health related costs, the whole world has flopped to adequately invest in preventive and preparedness measures to get rid of risks of massive epidemics.
Infectious disease outbreaks and epidemics have become threats to the globe that require collective responses as a result of globalization, urbanization, and environmental changes. Even though the most of the developed countries in the world, mainly Europeans and North Americans, have a highly strong real-time surveillance and health systems to manage the spread of infectious diseases, and advancements in the capacity of public health in low income and high risk countries including human and animal surveillance, preparedness of labor forces, labor resources strengthening – need to be helped by using national resources supplemented with international donor funding methods. Government, non-government and private sector companies connected international collective action and financial technological platforms to expedite the research on and development response to “new infectious agents” with epidemic potentials. In the case of COVID-19, such cooperation is censorious, especially for the development of the vaccines. A global partnership launched in 2017, the Coalition of Epidemic Preparedness Innovations (CEPI) has traced the global efforts COVID-19 vaccine development related activities and is recommending for strong international cooperation to ensure the vaccine to be produced in sufficient quantities and that equal access to be granted to all nations regardless of the financial situations to afford to pay. Further to the CEPI recommendations, the affected countries get the advantage from exchanging technological innovations in contact track down, such as health Quick Response (QR) codes, to effectively manage the pandemic outbreak. Nevertheless, there are some major privacy applications that need to be considered. However, in the case of COVID-19, the implementation of the collective response and adaptation of the preventive measures to stop the global spread of the pandemic were too late, as COVID-19 had already pierced other regions through international travels.
In addition to the considerable amount of weight put on the health care systems, COVID-19 has given huge negative economic results for the affected countries. The impact of COVID-19 pandemic on the income factor is considerably huge and it has caused due to premature deaths, workplace absenteeism, and downsize in productivity which created a negative supply shock, with slowing downs in manufacturing productive activity due to descriptions in global supply chain and factory closures. For example, the production index in February, 2020 in China decreased by more than 54% from the previous month’s value. In addition to the impact on productive economic activities, spending behaviors of the consumers also changed, mainly due to downsize in income and household finances, and also the fear and panic that caused by the epidemic. The pandemic related travel restrictions caused reductions in travels and caused the following to which the services industries such as tourism, hospitality and transportation to suffer from significant losses. The projected loss in airline revenue solely from passenger carriage records a value upto $314 billion, according to the International Airport Association. Restaurants and bars, travel and transportation, entertainment and sensitive manufacturing are identified as the sectors among the worst affected in the U.S. by the quarantine measures of COVID-19. According to the advanced seasonally adjusted records, the insureds unemployment rate in the U.S. has already achieved a record level of 11% by the week ended on 11th April, 2020.
Other than the listed health imbalances, mainly in the countries that don’t have universal health coverage, the impact of the COVID-19 pandemic will be diversified across the county’s income distributions. For instance, in-house office workers are more likely to get privileged with flexible work at home arrangements during the pandemic restrictions, and at the same time, the industrial, tourism, retail and transport workers will experience a huge and considerable reduction in their work due to pandemic restrictions and reduced demand for their goods.
The impact from COVID-19 on the global financial market is too much higher. The world financial and oil markets significantly declined following to the number of COVID-19 cases stated to increase through the U.S., Italy, Spain, Germany, France, Iran and South Korea. The leading European and U. S. Stock market indicators lost a quarter of their values since the start of the year 2020, with the declines in oil prices by over 65% as of 4th week of April, 2020. Volatility and price movements in the daily data on the stock market are good indicators of customer and business confidence in the economy. There was an notable pessimistic Relationship between the daily numbers of COVID-19 cases and stock market indications, as the correlation ranged from (-0.34) to (-0.80).
Greater economic problems are correlated with the ongoing and potential future demand for oil translating into fluctuating oil prices due to decreased economic activities lured by the pandemic. Expected overabundance in oil supply was also responsible for the significant reduction in prices. If oil prices continue to be lower than forecasted, many economies that are highly dependent on oil may contract following reductions in trade and investment. Labor market shock will be acute, mainly to the countries dependent on migration. To address the imbalance in both high-skilled and low-skilled occupations, the migrant workers make important contributions to the global labor markets. As there is a possibility of international travel and quarantine restrictions to remain for the foreseeable future as countries try to halt the COVID-19 spread, flows of the migrants will be limited by obstructing the growth of the global economy and its development.
Since the COVID-19 virus is likely to continue hindering economic activities by impacting negatively on the manufacturing and services industries, mainly in developed countries, it is expected that the financial markets to be volatile, despite of knowing whether the unfolding crisis is going to make a lasting structural impact on the global economy or it is going to give massive short-term financial and economic consequences.