The covid-19 pandemic has reached almost every country in the world. It’s a global shock, comprising simultaneous disturbances to both supply and demand in international economy. On the supply side, virus reduces labor supply, which leads to the decline of production. While lock-downs, social distancing and business closures also affect the supply. On the other hand, demand is also affected by this pandemic. Unemployment, quarantines leads to loss of income and worsened economic forecasts reduce household consumption and firms’ investment.
Economic Challenges During and After Pandemic
Now the main challenges for any practical economic analysis of Covid-19 are how to identify this exceptional shock and how to boost the economy again. Because the impact of the pandemic could pose the vicious cycle of dampening business and tightening financial conditions, which could lead to job losses and investment.
The wide spread of covid-19 has left general economies and businesses counting the expenses as governments struggle with new lock-downs methods to tackle the spread of the virus. Many people have lost their jobs or seen their income cut.
Regardless of the development of new vaccine, people are still doubting what recovery could look like. The tourism industry has been severely damaged, with airlines cutting flights and customers cancelling their trips.
In recent months, new variant of the virus has also been exposed, that forced several countries to announce tighter travel limitations. Retrieval in huge economies that have been hit hard by the outbreak, for instance the UK, is expected to be slow. Many analysts rely on that global travel & tourism won’t return to the usual pre-pandemic stages until around 2025.
The pandemic will probably leave deep scars on the global economy.
How to Tackle the Effects Of Virus?
Now this is a chance for us to refocus on sustainable investment. There is also initial evidence proposing that sustainable investment methodologies continue to overtake the broader market in this crises. The crisis has exposed that worldwide problem require an “entire economy” effort to solve. Governments are working together with investors and companies to tackle the effects of the virus on well-being and society.
In addition, with Covid-19, people have understood that crises can happen at any time, so they have learned to plan, and save for the long term and should keep the debts levels low. We have learned the importance of what we have, since now we are aware that we can lose it at any time.