The Covid-19 pandemic has contributed to serious economic losses in countries around the world. In 2020, the pandemic cratered economic activity and investment, causing the global economy to contract by 4.3 percent (“Global economic recovery remains precarious, rebound of 4.7% to barely offset 2020 losses”). As countries begin to reopen and recover from the Covid-19 pandemic, the global economy is expected to stage a strong post-recession recovery. Though experts expect economic growth in almost every region of the world, countries will likely continue to struggle with Covid-19 and its long-term effects. As of 2021, experts estimate that global GDP will still be 3.2 percent below pre-pandemic predictions and per capita GDP will stay below pre-pandemic peaks (“The Global Economy: on Track for Strong but Uneven Growth as COVID-19 Still Weighs”). To ensure the global economy has a strong, sustainable recovery, governments should make strategic investments in the economy and society as a whole (“Global economic recovery remains precarious, rebound of 4.7% to barely offset 2020 losses”).
One economic system that has been significantly impacted by the Covid-19 pandemic is the market economic system. The threat posed by Covid-19 has led several countries to enact lockdowns and other preventive measures to slow the spread of the virus. These measures have had a significant effect on economic production in market economies. These measures have not only slowed down the production of essential goods in market economies but also have disrupted the supply chain of products. They have also contributed to the closure of several companies, causing millions of workers in market economies to lose their jobs (Shang et al.). While the Covid-19 pandemic has negatively impacted most market economies, it has hit emerging market economies the hardest. Many emerging market economies suffer from poor social safety nets, weak public health systems, and limited ability to enact monetary and fiscal policies. The Covid-19 pandemic has exacerbated these problems, increasing economic instability in emerging market economies (Ahmed et al.).
To promote economic stability and recovery in countries around the world, experts recommend policymakers enact several fiscal and monetary policies (“The Global Economy: on Track for Strong but Uneven Growth as COVID-19 Still Weighs”). First, experts suggest policymakers implement policies that encourage investment, such as instituting public-private partnerships and injecting capital into the banking system. Second, experts recommend policymakers implement policies to help increase earnings. One path policymakers can pursue to increase earnings is to increase government spending on public goods (Shannon and Carlson). One other path policymakers can pursue to increase earnings is to promote domestic spending. By promoting domestic spending, experts think policymakers can limit the effect of the pandemic on businesses and consumers, helping sustain employment and demand (Prasad and Wu). Third, experts recommend the government institute programs to support workforce readiness, such as reskilling programs for new industries (Shannon and Carlson). By implementing these policies, experts believe that governments can help the global economy stage a strong recovery.
As the global economy recovers, one problem that needs to be addressed is that developing countries will likely struggle to implement the fiscal and monetary policies prescribed. Since developing countries will probably have difficulty enacting these recovery strategies, the Covid-19 pandemic will likely have long-lasting economic effects on these countries (Tenison and Xu). While massive spending measures have prevented the global economy from collapsing, the difference between the size of stimulus packages in developed and developing countries will likely cause global economic recovery to be unevenly distributed. To address this issue, experts recommend developed countries provide greater support to developing countries. Developed countries can do this by providing debt relief to developing countries and offering extensive stimulus packages to help stimulate their economies (“Global economic recovery remains precarious, rebound of 4.7% to barely offset 2020 losses”). By providing aid and assistance to developing countries, developed countries can help ensure that economic recovery is equitable and evenly distributed.
The Covid-19 pandemic has provided a unique opportunity for governments and businesses to create stronger, more equitable economies for the future. As the global economy reopens and recovers, governments and businesses can follow three guiding policies to produce more efficient and inclusive economies. Firstly, governments and businesses can invest in social issues and work together to enact social change. Secondly, governments and businesses can create and strengthen communication networks. To ensure open dialogue between governments and businesses, governments can implement roundtables, conferences, and other communication channels with businesses. Thirdly, governments can increase incentives for transparency. By providing economic incentives like tax breaks and increased capital support, governments can encourage companies to act in socially beneficial ways (Shannon and Carlson). By following these three guiding principles, governments and businesses can create economies for the future that promote both the economic and social well-being of citizens.
Works Cited:
Website Name: PwC. Website Address: Creating economic recovery and growth after COVID-19 (pwc.com). Date Accessed: 1/23/22.
Website Name: United Nations. Website Address: Global economic recovery remains precarious, rebound of 4.7% to barely offset 2020 losses | United Nations. Date Accessed: 1/23/22.
Website Name: Brookings. Website Address: Anatomy of the coronavirus collapse (brookings.edu). Date Accessed: 1/23/22.
Website Name: Tradeology. Website Address: Exploring the Global Economic Recovery from COVID-19 – Tradeology, the ITA Blog. Date Accessed: 1/23/22.
Website Name: The World Bank. Website Address: Global Economic Prospects: The Global Economy: on Track for Strong but Uneven Growth as COVID-19 Still Weighs (worldbank.org). Date Accessed: 1/23/22.
Website Name: Frontiers in Public Health. Website Address: Frontiers | Effects of Pandemic Outbreak on Economies: Evidence From Business History Context | Public Health (frontiersin.org). Date Accessed: 1/23/22.
Website Name: Board of Governors of the Federal Reserve System. Website Address: The Fed - The Impact of COVID-19 on Emerging Market Economies' Financial Conditions (federalreserve.gov). Date Accessed: 1/23/22.
Website Name: Flourish. Website Address: Covid-19 Economic Recovery Index Ranking | Flourish. Date Accessed: 2/22/22.