Author: Aurrel Bhatia
Labelled as a worldwide pandemic, the spread of coronavirus, also known as COVID-19, has nearly 650,000 reported cases and a death toll of more than 30,000 individuals, these numbers increase as the days progress . While it has adverse effects on an individual’s social, physical, and emotional wellbeing, another looming pattern is seemingly emerging: economic decline.
These economic impacts are spurred by the disruption in the supply and production of goods. Financial markets are suffering the consequences, with the FTSE, Dow Jones Industrial Average and the Nikkei all having witnessed tremendous falls since the outbreak, and the Dow recently observed its biggest one-day decline since 1987 of almost 3,000 points . These drops have added to mounting uncertainty and deteriorating financial stability, further crippling businesses and adding to increasing scepticism about unemployment. Specific industries are affected disproportionately compared to others, but COVID-19 is taking a toll on most individuals and businesses.
The outbreak of COVID-19 has disturbed the normality of economic activity, with the travel industry being affected the most. Many governments have taken action against travelling to reduce the spread of COVID-19 and “flatten the curve”; the E.U. banned travellers from outside the bloc for 30 days, just one example amongst 100 other countries which have implemented some type of restriction as well . Additionally, factory production, especially in China, has slowed down, which is worrisome for many large corporations worldwide: in transportation, hospitality, airlines, luxury goods, and technology .
These losses and downturns all point to one outcome: an economic recession. From a technical standpoint, an economic recession occurs when there are two-quarters of negative Gross Domestic Product (GDP) . Trends in the global economy are beginning to show these patterns . In fact, according to the International Monetary Fund, it is clear that the global economy is currently in a recession that could be equally bad or worse than the 2009 downturn . While it may be perceived that the United States and other world-leading powers are exempt from economic downturns, over 81 nations are now seeking support from an IMF emergency financing program that’s used to provide aid, depicting the harsh realities of the worldwide economy . The St. Louis Federal Financial Stress Index, which measures different forms of financial stress such as falling stock prices, has risen to 5.79, the highest since the 2008 financial crisis, which had an index score of 9.12 .
How does the recession affect the average individual? For one, rates of unemployment are skyrocketing. The Economic Policy Institute estimates three million workers will lose their jobs by the summer, and the number of workers filing for unemployment could reach 695,000 a week, exceeding numbers reached during the recession of 1982 the Great Recession . In the United States, 1 in 5 workers reported that someone in their household lost their job or was forced to decrease working hours .
These circumstances make it challenging for people to continuously work and support their families which makes the future seem bleak, however, there is hope. While practicing social distancing, we must grow together as a community, and a world, supporting everyone to cope with the COVID-19 pandemic crisis . Some ways to help your local community and rebuild the economy are:
- Support local food banks: Due to increasing unemployment, many people are struggling to put food on the table for their families, so monetary donations or involvement can help the vulnerable in society.
- Buy products and services from local business: Helping small businesses can boost the economy of your area and provide aid to businesses who heavily rely on customer support.
- Help the elderly with groceries: Currently the elderly are amongst the demographic that is most at risk, so you can offer to buy their groceries or help provide meals and leave the supplies on their porch (providing help while minimizing social interaction).
- Help neighbors with younger children: Offer to virtually babysit the children of working parents so they can continue their work routines and be able to support their family amid school closures.
These are all potential ways to help people and get involved in the current situation. If you are unable to help in any other way, simply practicing social distancing can help “flatten the curve”. With cooperation, we can overcome this pandemic and strengthen the economy together.
Biography: Aurrel is a high school sophomore from New York, currently interested in exploring the intersections between STEM and Humanities. She is passionate about Journalism and world affairs, and hopes to combine these interests with mathematics, physical, and social sciences. When she isn’t competing in math, doing scientific research or ethical debate competitions, you can find her listening to music, playing instruments, or tutoring and doing other types of outreach community service.
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