How the Economy Will Look After the Corona-virus Pandemic
In an economy that was already disturbed and insufficiently diversified with less economic resources and with a weak political system, a pandemic like this is a disaster it requires a balance between economic, political, and financial units.
Economic globalization will be more sensitive and more nearsighted after the pandemic and self-sufficiency is necessary requirement. People will access their individual risks and rely on their own power and resources supporting themselves. Firms that were dependent on other firms and had global supply chains face much more risk than less global firms making them collapse.
The trade barriers and capital controls are likely to default.
Since the financial crisis of 2008-2009 modern globalization has faced a blow but this coronavirus has hit both the developed and developing countries hard. The trade and cash flows or finance will be in a bad state even after coronavirus is gone.
Finally, economic nationalism will increasingly lead governments to shut off their own economies from the rest of the world and will continue to rely on US dollar for financing even though it will not be attractive but better than any other, so it will attract more resulting in the resentment of the third party.
In this situation when the world is looking at central banks, they have stepped out of their conservativeness and have shown their boldness by tearing their own rule books providing people with the best they can do. Financial markets providing assets and more liquidity to central banks and central banks providing assets and bonds etc. defeating and defending against the financial and economic crisis.
Loss of lives, with unemployment high, jobs lost permanently and a lot of money gone also businesses shut down changing permanently the future composition of GDP, the low skilled, low wages employees harmed badly. Will this all be recovered? No, it will get worse as the lockdown prolongs and the scars will get deeper with slow recovery and leading toward recession. It will get better after coronavirus is gone if we call for a more active, more visionary government to lead the way out of the crisis.
New skills will be required because now when we are working from home and mobility is increasing so everyone will depend on Wi-Fi which will require expansion of broadband and infrastructures making the novice in this field learn these skills and the downturn will start for those who worked offline. New job opportunities will be introduced in this field changing the weightage of the basket of goods and services.
Also, another change has been accelerated moving away from U.S.-centric globalization to more China-centric globalization because Americans have lost faith and china hasn’t because of past historical events making the US coordinate with china to improve the well-being of its people or engage with china politically and economically.
If this wartime was held between countries it was going to be more troublesome but now as the whole world is having the same enemy, which is a virus, all are at the same page with one another, feeling for each other, helping each other which is the good side of this pandemic that government is feeling and helping its nation and the other countries are feeling sympathy towards the poor ones. Also, the atmosphere and pollution are getting better as the ozone layer is recovering. But still, its benefits are very few as compared to the side effects and harm it has done.
Written By: LAIBA AMJAD