Coronavirus pandemic has greatly affected the livelihoods of every individual across the globe. All nations, despite their economic positions, are fighting the pandemic. Notably, no state has yet found a sustainable solution that can help to fully eliminate the virus. Many countries ignored the virus as it spread across China. Currently, the global financial markets are reacting strongly, a factor that stroke fear of a possible global depression. There is a looming fear of a global recession in the global economy (Stiglitz et al., 2020). This implies that the entire globe is uncertain about the status of the economies in the coming years as a result of the uncertainties around the Coronavirus pandemic.
The Prospect of a Recession Caused by COVID-19
History shows that recessions and bear markets often fail to be automatically conflated. In the past century, there have been seven instances, where the bear markets did not coincide with the recessions (Stiglitz et al., 2020). Therefore, it might be challenging to draw a line between the financial market and the real economy. In the UK and US, workers under the age of thirty, as well as those with lower incomes have had some of the most challenging experiences as a result of the economic shutdown which has been brought by the pandemic (University of Cambridge, 2020). Many of them have lost their jobs, whereas more are still expected to go through job loss by August. Workers earning lower incomes are also likely to suffer from job loss, as compared to their counterparts who earn more.
The US is one of the nations which is likely to be hit hard by the pandemic. It is one of the most vulnerable economies fright due to the extreme number of cases caused by the pandemic. Nations are likely to face financial, policy, and real recessions (University of Cambridge, 2020). The reason for the major recession will be due to the tragic loss of life, the lockdowns and the uncertainty behind the pandemic.
Many businesses have been closed and jobs are yet to come back. People are no longer traveling across the globe and these are considered as factors which are likely to cause a recession (Carlsson-Szlezak, Martin, & Paul, 2020). From the pandemic, it is evident that there is a need to have a balance between globalization and self-reliance (Stiglitz et al., 2020). This is because, as it currently stands, globalization has been affected by the pandemic where nations have no choice but to rely on their industries and products due to the closed borders. Many firms that were part of the global supply chain have clearly been faced by huge disruptions, due to the closed borders and the interdependencies between various supply chains (Stiglitz et al., 2020). The closing of borders has revealed that nations will have no options in the future other than to consider relying on their industries more and balancing on globalization.
In summation, there is a high likelihood that the current lockdown and the major challenges that have been a result of this pandemic will likely hurt the global economy in the future. From the prevailing conditions, many jobs will continue to be lost unless there is a solution to the pandemic. There is a need for governments and experts across the globe to work tirelessly until they develop a sustainable solution that will help in tackling the COVID 19 pandemic. Nevertheless, the world needs to embrace itself for tougher challenges, both economically, and socially, as a consequence of the virus, even after the recovery.