Background
More than a year ago, the COVID-19 pandemic induced a devastating health and economic crisis across the globe. As at August 13, 2021, according to statistics published by the World Health Organization (WHO), there are 205.3 million cumulated COVID-19 cases globally (3% of the global population); and over 4.3 million cumulative deaths globally, representing 2.1% of the global confirmed cases.
In the case of Guyana, as at August 13, 2021, Guyana’s cumulative confirmed COVID cases amounts to 23,156 persons, which represents 3% of the local population – well in line with the global average; and 567 deaths, representing 2.4% of the total COVID-19 cases, which is above the global average of 2.1%.
Global economic impact
With respect to the global economic impact of the COVID-19 pandemic, the pandemic disrupted lives across all countries and communities, and negatively affected global economic growth in 2020 on an annualised rate of -3.4% to -7.6%, with a projected recovery rate of 4.2% and 5.6% for 2021. Global trade is estimated to have fallen by 5.3% in 2020, and was not as negative as initially estimated, due in part to the fiscal and monetary policies governments adopted in 2020 (CRS Report, 2021).
In a report prepared for the January 2021 World Economic Forum, the International Labor Organization (ILO) estimated that “93% of the world’s workers at that time were living under some form of workplace restrictions as a result of the global pandemic, and 8.8 % of global working hours were lost in 2020 relative to the fourth quarter of 2019, an amount equivalent to 255 million full-time jobs.
In July 2021, the OECD estimated that the pandemic-related recession cost 22 million jobs in the OECD countries in 2020, and 114 million jobs globally, compared with 2019.
As a consequence of the slowdown in economic activity in the fourth quarter of 2020, and projected slow but partial recovery in 2021, the OECD estimated that there would be long-lasting effects on the global economy, including:
* Output was projected to remain around 5% below pre-crisis expectations in many countries in 2022, raising the spectre of substantial permanent costs, disproportionately affecting vulnerable populations.
* Smaller firms and entrepreneurs are more likely to go out of business.
* Many low-wage earners who lost their jobs and are only covered by unemployment insurance at best, with poor prospects of finding new jobs quickly.
* People living in poverty and usually less well covered by social safety nets experienced a deterioration in their living standards.
* Children and youth from less well-off backgrounds, and less qualified adult workers struggled to learn and work from home, with potentially long-lasting damage.
The OECD also concluded that:
* Real per capita income in 2020 was projected to decline by 8% and 9.5% respectively, depending on a year or two-wave contagion, with substantial declines in all economies. Even with an economic recovery in 2021, real per capita income was projected to rise to only that of 2013.
* Unemployment was projected to rise to its highest level in more than 25 years, while the average unemployment rate was projected to rise to 7.4% in 2021 and 6.9% in 2022.
The OECD concludes that, “scarring effects from job losses are likely to be felt, particularly by younger workers and lower-skilled workers, with attendant risks of many people becoming trapped in joblessness for an extended period.”
* Net productive investment (business and government) was weak prior to the pandemic, falling behind the average rate of investment during the previous decade. Investment was forecast to contract by half as a percentage of GDP, falling from 4.7% to 2.3% and 2.0% respectively for the one-wave and two-wave scenarios, and increasing the risk of entrenched weak economic growth. Investment is also expected to be negatively affected by bankruptcies and insolvencies among corporations and financial institutions.
According to the OECD forecast, the greatest impact of the containment restrictions has been on the retail and wholesale industries, and in the professional and real estate services, although there are notable differences between countries. Business closures may have reduced economic output in advanced and major emerging economies by 15% or more; other emerging economies could have experienced a decline in output of 25%. Countries dependent on tourism have been affected more severely, while countries with large agricultural and mining sectors experienced less severe effects.
To be continued…
About the Author:
JC. Bhagwandin is a financial and economic analyst. The views expressed are exclusively his own, and do not necessarily represent those of this newspaper and the institutions he represents. For comments, send to [email protected].
