The COVID-19 pandemic was a significant event that changed the world. It is an airborne infectious disease caused by the SARS-CoV-2 virus, leading countries globally to shut down their borders and implement quarantine for almost two years. It was a virus that impacted every person regardless of age, gender, race or nationality, with the potential to become seriously ill or meet a fatal fate.
COVID-19 created a new normal whereby schools and businesses shifted online, although essential workers had to go to work in person on a roster basis. This heightened the importance of having digital processors to carry on with work or education remotely. This article will explain how the COVID-19 pandemic greatly impacted the global economy and job market.
How Did COVID-19 Impact the Global Economy?
The pandemic caused the most major economic crisis in the world for over a century. Developing countries especially faced a more challenging time and are still facing it. This also demonstrates that the inequality within countries only widened. Here are a few ways how COVID impacted the global economy.
Reduction in Gross Domestic Product (GDP)
With the impact of COVID-19 on businesses, the GDP was reduced by 3.4 per cent. While this may seem small, suppose that a nation’s GDP in 2020 was USD 84.54 trillion. In this respect, a 3.4 per cent GDP means that more than two trillion USD was lost. While the GDP improved in 2021, developing nations, in particular, need help to return to their annual GDP growth. Due to this, today, governments globally have increased taxes for the public to have enough revenue for public functions.
Facing Inflation
According to a report by McKinsey & Company, the pandemic was predicted to lead to inflation everywhere except in Europe and Greater China. However, as seen from the current situation, the pandemic has been one core reason why certain European countries, such as the United Kingdom, have been facing an economic recession. Respondents who participated in the reported survey were pessimistic about whether it would only be selected countries that would face inflation. As seen today, global conditions have weakened due to a worldwide recession rather than a purely nationalistic one.
Widening of Inequalities
According to the World Bank, before the pandemic, households and firms from emerging economies faced unsustainable debt. With the sharp decline in income and business revenue, the communities could not service this debt. As a consequence, global poverty increased among populations and across countries. As governments in such countries failed to address preexisting economic fragilities, the section of the public that belonged to low-income families suffered more. The post-COVID has resulted in many facing food hunger and a lack of other basic needs.
How Did COVID-19 Impact the Job Market?
COVID impacted the job market depending on the industry. For instance, industries like marketing, communications and online shopping were comparatively doing better than those from manufacturing, construction, and similar sectors. Here is how they may have differed:
Travel and Tourism
A natural consequence of COVID was the introduction of travel restrictions and, in some cases, the closing of borders. Hence, the travel and tourism industry was greatly affected. The number of flights which does not only help foreigners to travel to another country but also restricts cargo from being flown in. At times, it delayed shipments. Countries that depended on the tourism industry faced losses, whereby the hospitality industry, in turn, also faced an enormous decrease in revenue.
Rise in Online Trade
One sector that rose in its sales was companies that did online trading. Whether it was groceries, clothes or something else, many people had no choice but to place their orders through the internet. In comparison to the trust the public had towards online transactions pre-COVID, at present, there is an increased trust in making them. Amazon, for example, was reported to have surged in sales, with their revenues reaching new records both in 2020 and 2021.
Change in Business Amongst SMEs
SMEs were severely impacted by COVID-19. They had limited formal credit and massive income losses. While this may have led some companies to shut down, some SMEs looked at alternative ways to reduce costs. One trend that was seen among SMEs was the rise in remote working. While working in person has its own advantages, the cost of renting a place, for instance, can be eliminated with remote work. Hence, there has been a rise in SMEs that have wholly adopted a remote working system.
Labour Shortage in Manufacturing
The manufacturing industry has been facing a labour shortage pre-pandemic. However, COVID widened the skills gap even more, requiring the manufacturing industry to look into other ways to fill their labour shortage. In this respect, there has been a surge in implementing digital solutions into manufacturing operations. In other words, since the pandemic, manufacturers have heavily invested in technology that allows them to automate mundane and repetitive processes to maximise productivity.
COVID-19 Drastically Changed The Game for All
No matter successful a company was before the pandemic in 2020, it drastically changed the game. It did not, however, level the playing field. Different industries were impacted on various levels, with companies that lacked the right digital solutions suffering enormously. SMEs suffered more than large organisations, whereas industries such as communications remain uninterrupted compared to sectors requiring their workforce to be on-site.
The pandemic, however, opened the eyes of the business world to integrate digital solutions into their operations to prevent work from being halted in such catastrophic events. Digital solutions have become a mandatory tool for any industry, and equipping such materials in organisations would help countries to improve their economy.
