The COVID-19 pandemic has triggered a global economic recession known as the COVID-19 recession. In most nations, the recession began in February 2020.
The COVID-19 lockdowns and other safeguards implemented in early 2020 threw the world economy into crisis after a year of global economic downturn that saw stagnation in economic growth and consumer activity. Every advanced economy has slid into recession within seven months.
The 2020 stock market crash, which saw major indices plunge 20 to 30 percent in late February and March, was the first big harbinger of recession. Recovery began in early April 2020, and by late 2020, many market indexes had recovered or even established new highs.
Many countries had particularly high and rapid rises in unemployment during the recession. More than 10 million jobless cases have been submitted in the United States by October 2020, causing state-funded unemployment insurance computer systems and processes to become overwhelmed. In April 2020, the United Nations anticipated that worldwide unemployment would eliminate 6.7 percent of working hours in the second quarter of 2020, equating to 195 million full-time employees. Unemployment was predicted to reach around 10% in some countries, with higher unemployment rates in countries that were more badly affected by the pandemic. Remittances were also affected, worsening COVID-19 pandemic-related famines in developing countries.
In compared to the previous decade, the recession and the associated 2020 RussiaSaudi Arabia oil price war resulted in a decline in oil prices, the collapse of tourism, the hospitality business, and the energy industry, and a decrease in consumer activity. The worldwide energy crisis of 20212022 was fueled by a global rise in demand as the world emerged from the early stages of the pandemic’s early recession, mainly due to strong energy demand in Asia. Reactions to the buildup of the Russo-Ukrainian War, culminating in the Russian invasion of Ukraine in 2022, aggravated the situation.
What impact did Covid have on the economy?
- The COVID-19 pandemic has taken a severe toll on the world economy, with the International Monetary Fund (IMF) forecasting a 3.9 percent reduction in global GDP from 2019 to 2020, making it the worst economic slump since the Great Depression. While the global economy is expected to recover in 2021, the recovery has been uneven, and gaps in vaccination access and coverage may jeopardize progress in many parts of the world.
- The White House’s U.S. COVID-19 Global Response and Recovery Framework, among other things, aims to boost the economies of countries that have suffered as a result of the pandemic. This will be particularly crucial in countries where the United States has made significant investments in other areas of health, such as PEPFAR, the United States’ global HIV program. COVID-19’s economic effects on the HIV response could be as important as the direct health effects, and hence could have a considerable impact on US efforts in these nations. We looked at the existing and predicted economic impact of COVID-19 in 53 PEPFAR countries to help influence these efforts.
- In general, we find that GDP dropped in the majority of PEPFAR nations in 2020, the year the pandemic broke out, compared to 2019. The contraction was greater than 10% in 11 countries. While PEPFAR countries saw a lower median GDP decline in 2020 than the world economy (1.9 percent vs. 3.9 percent), they performed worse than their economic and geographic peers.
- While the global economy was expected to revive in 2021, the same could not be said for the PEPFAR countries. While almost all PEPFAR countries are expected to expand their GDP in 2021, the anticipated growth, at least through 2024, is expected to be lower than pre-pandemic estimates (10-13 percent below). Global GDP expectations, on the other hand, are currently higher than pre-pandemic estimates. Furthermore, the global economy’s troubles are likely to persist, particularly in low- and middle-income nations, as the strong bounce seen in 2021 is predicted to slow in 2022.
- Finally, economic recovery in PEPFAR countries faces enormous uncertainty, since it will be heavily dependent on the future course of the COVID-19 epidemic, economic relief measures, and vaccine roll-out. Less than a third of the population in 30 of the 53 PEPFAR nations has gotten at least one vaccination dose, and just 10 are on track to reach global COVID-19 vaccine targets this year.
Introduction
The worldwide economy has taken a huge hit as a result of the COVID-19 pandemic, with the International Monetary Fund (IMF) forecasting a 3.9 percent reduction in global median GDP from 2019 to 2020, the worst downturn since the Great Depression. The global economy was predicted to increase last year, in 2021, as countries began to reopen and vaccines became accessible, though still below pre-pandemic estimates, and recovery has been unequal across countries and regions. Furthermore, the IMF has stated that vaccine access is critical to economic recovery “As some countries return to normalcy, others continue to see new waves of illnesses and growing death rates. Indeed, vaccine coverage in low-income nations lags well behind that of other countries, and many are unlikely to meet global vaccine targets at current rates.
A goal under the White House’s COVID-19 Global Response and Recovery Framework is to “bolster economies and other important systems that are under stress as a result of COVID-19 in order to avoid a reversal and facilitate recovery.” This will be especially crucial in countries where the United States has made significant investments in other areas of health, such as PEPFAR, the United States’ global HIV/AIDS program. Because HIV is an infectious disease with no vaccine or cure, the economic consequences of COVID-19 on the HIV response could be as significant as, if not more so, than the direct health consequences.
COVID-19’s current and predicted economic impact in PEPFAR nations is examined in this brief. We used data from the World Economic Outlook (WEO)1 of the International Monetary Fund (IMF) on GDP and GDP growth projections2 for 53 countries3 that were required under PEPFAR to submit a Country Operational Plan (COP/ROP) in FY 2020. 4 To further comprehend the expected economic impact, we compared the IMF’s WEO pre-pandemic and current data predictions. Pre-pandemic projections were collected from the WEO database in October 2019, and current data projections were taken from the WEO database in October 2021. The appendix offers WEO GDP growth data for all 53 PEPFAR nations as of October 2021, as well as the world median aggregate.
Economic Impact of COVID-19 in 2020
Almost all PEPFAR nations saw GDP reductions in 2020, and many performed worse than their economic and regional rivals. Nonetheless, PEPFAR countries as a whole saw a smaller recession in 2020 than the world economy.
- In 2020, 32 of the 53 PEPFAR nations (60 percent) are expected to have seen GDP declines. The contraction was greater than 10% in 11 countries. Three of the top five countries with the highest estimated contractions (Angola, Zambia, and Namibia) were in Sub-Saharan Africa, while the other two (Brazil and Panama) were in the Western Hemisphere. The contractions varied from -0.04% in Nicaragua to -30.90% in Angola (see Figure 1).
- In 2020, 21 PEPFAR nations saw positive GDP growth (see Figure 1), however growth was lower in 11 of these countries than in 2019. (see Appendix 1).
- PEPFAR countries as a group saw less recession in 2020 than the global economy (1.9 percent median decline in PEPFAR countries vs. 3.9 percent overall) (see Figure 1), however they lagged behind their economic and geographical peers (see Figure 2).
Is there going to be a recession in 2021?
Unfortunately, a worldwide economic recession in 2021 appears to be a foregone conclusion. The coronavirus has already wreaked havoc on businesses and economies around the world, and experts predict that the devastation will only get worse. Fortunately, there are methods to prepare for a downturn in the economy: live within your means.
What causes the economic downturn?
Most recessions, on the other hand, are brought on by a complex combination of circumstances, such as high interest rates, poor consumer confidence, and stagnant or lower real wages in the job market. Bank runs and asset bubbles are two further instances of recession causes (see below for an explanation of these terms).
What is the state of the economy in 2021?
“While Omicron will slow growth in the first quarter, activity is projected to pick up nicely once the newest pandemic wave has passed and supply-chain issues have been resolved,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.
“As it navigates underlying economic strength, rising labor shortages, and stubbornly high inflation, the Fed will need to remain ‘humble and flexible.'”
The economy increased at its fastest rate since 1984 in 2021, with the government providing roughly $6 trillion in epidemic relief. In 2020, it shrank by 3.4 percent, the most in 74 years.
President Joe Biden swiftly claimed credit for the outstanding performance, calling it “no accident.”
After Congress failed to approve his key $1.75 trillion Build Back Better legislation, Biden’s popularity is declining amid a stalled domestic economic plan.
In a statement, Biden said, “We are finally building an American economy for the twenty-first century, and I urge Congress to keep this momentum going by passing legislation to make America more competitive, strengthen our supply chains, strengthen our manufacturing and innovation, invest in our families and clean energy, and lower kitchen table costs.”
According to the government’s advance GDP estimate, gross domestic product increased at a 6.9% annualized pace in the fourth quarter. This follows a third-quarter growth rate of 2.3 percent.
However, by December, the impetus had dissipated due to an assault of COVID-19 infections, spurred by the Omicron variety, which contributed to lower expenditure and disruption at factories and service organizations. However, there are hints that infections have peaked, which could mean a surge in service demand by spring.
Inventory investment surged by $173.5 billion, accounting for 4.90 percentage points of GDP growth, the highest level since the third quarter of 2020. Since the first quarter of 2021, businesses have started reducing inventories.
During the epidemic, people’s spending shifted from services to products, putting a strain on supply systems. GDP rose at a sluggish 1.9 percent rate, excluding inventories.
On Wall Street, stocks were trading higher. Against a basket of currencies, the dollar rose. Treasury yields in the United States have fallen.
The minor increase in so-called final sales was interpreted by some economists as a sign that the economy was about to decline severely, especially if not all of the inventory accumulation was planned. They were also concerned that rate hikes and diminished government aid, particularly the elimination of the childcare tax credit, would dampen demand.
“Fed policymakers will have to tread carefully when raising interest rates,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Every other Federal Reserve in history has raised interest rates too high and brought the economy crashing back down.”
Last quarter’s growth was also boosted by a surge in consumer spending in October, before falling sharply as Omicron raged. Consumer expenditure, which accounts for more than two-thirds of GDP, increased by 3.3 percent in the fourth quarter after increasing by 2.0 percent in the previous quarter.
Increases in spending on healthcare, membership clubs, sports centers, parks, theaters, and museums balance a decline in purchases of motor vehicles, which are scarce due to a global semiconductor shortage.
Inflation rose at a 6.9% annual pace, the fastest since the second quarter of 1981, far beyond the Federal Reserve’s target of 2%. As a result, the amount of money available to households fell by 5.8%, limiting consumer expenditure.
Households were still buffered by large savings, which totaled $1.34 trillion. Wages increased by 8.9% before accounting for inflation, indicating that the labor market is experiencing a severe labor shortage, with 10.6 million job opportunities at the end of November.
Though the job market slowed in early January as Omicron rose, it is now at or near full employment. Initial jobless claims fell 30,000 to a seasonally adjusted 260,000 in the week ending Jan. 22, according to a second Labor Department report released on Thursday.
Claims decreased dramatically in Illinois, Kentucky, Texas, New Jersey, New York, and Pennsylvania.
Last quarter’s GDP growth was aided by a resurgence in corporate equipment spending. Government spending, on the other hand, has decreased at the federal, state, and municipal levels.
After being a drag on GDP growth for five quarters, trade made no contribution, while homebuilding investment fell for the third quarter in a row. Expensive building materials are constraining the sector, resulting in a record backlog of homes yet to be built.
Despite the economy’s difficulties at the start of the year, most experts predict the good luck will continue. This year’s growth forecasts are at least 4%.
“This year, the economy could be even better,” said Scott Hoyt, a senior economist with Moody’s Analytics in West Chester, Pennsylvania. “The economy will stagnate, and monthly employment increases will fall short of last year’s high levels. Nonetheless, by the end of the year, the economy should be close to full employment and inflation should be close to the Fed’s target.”
(Paragraph 7 was removed from this story because it contained incorrect information.)
When did COVID-19 get underway?
SARS-CoV-2 is a novel virus linked to bat coronaviruses, pangolin coronaviruses, and SARS-CoV. The first epidemic was reported in November 2019 in Wuhan, Hubei, China. Many of the first cases were related to people who had visited the Huanan Seafood Wholesale Market nearby, but human-to-human transmission may have started earlier.
The virus is most likely zoonotic, originating in bats or another closely related mammal, according to scientific consensus.
Regardless, the question has sparked a lot of debate concerning other beginnings. The origin debate exacerbated global tensions, particularly between the US and China.
What should I put away in case of economic collapse?
Having a strong quantity of food storage is one of the best strategies to protect your household from economic volatility. In Venezuela, prices doubled every 19 days on average. It doesn’t take long for a loaf of bread to become unattainable at that pace of inflation. According to a BBC News report,
“Venezuelans are starving. Eight out of ten people polled in the country’s annual living conditions survey (Encovi 2017) stated they were eating less because they didn’t have enough food at home. Six out of ten people claimed they went to bed hungry because they couldn’t afford to eat.”
Shelf Stable Everyday Foods
When you are unable to purchase at the grocery store as you regularly do, having a supply of short-term shelf stable goods that you use every day will help reduce the impact. This is referred to as short-term food storage because, while these items are shelf-stable, they will not last as long as long-term staples. To successfully protect against hunger, you must have both.
Canned foods, boxed mixtures, prepared entrees, cold cereal, ketchup, and other similar things are suitable for short-term food preservation. Depending on the food, packaging, and storage circumstances, these foods will last anywhere from 1 to 7 years. Here’s where you can learn more about putting together a short-term supply of everyday meals.
Food takes up a lot of room, and finding a place to store it all while yet allowing for proper organization and rotation can be difficult. Check out some of our friends’ suggestions here.
Investing in food storage is a fantastic idea. Consider the case of hyperinflation in Venezuela, where goods prices have doubled every 19 days on average. That means that a case of six #10 cans of rolled oats purchased today for $24 would cost $12,582,912 in a year…amazing, huh? Above all, you’d have that case of rolled oats on hand to feed your family when food is scarce or costs are exorbitant.
Basic Non-Food Staples
Stock up on toilet paper, feminine hygiene products, shampoo, soaps, contact solution, and other items that you use on a daily basis. What kinds of non-food goods do you buy on a regular basis? This article on personal sanitation may provide you with some ideas for products to include on your shopping list.
Medication and First Aid Supplies
Do you have a chronic medical condition that requires you to take prescription medication? You might want to discuss your options with your doctor to see if you can come up with a plan to keep a little extra cash on hand. Most insurance policies will renew after 25 days. Use the 5-day buffer to your advantage and refill as soon as you’re eligible to build up a backup supply. Your doctor may also be ready to provide you with samples to aid in the development of your supply.
What over-the-counter drugs do you take on a regular basis? Make a back-up supply of over-the-counter pain pills, allergy drugs, cold and flu cures, or whatever other medications you think your family might need. It’s also a good idea to keep a supply of vitamin supplements on hand.
Prepare to treat minor injuries without the assistance of medical personnel. Maintain a well-stocked first-aid kit with all of the necessary equipment.
Make a point of prioritizing your health. Venezuelans are suffering significantly as a result of a lack of medical treatment. Exercise on a regular basis and eat a healthy diet. Get enough rest, fresh air, and sunlight. Keep up with your medical and dental appointments, as well as the other activities that promote health and resilience.
How do you get through a downturn?
But, according to Tara Sinclair, an economics professor at George Washington University and a senior fellow at Indeed’s Hiring Lab, one of the finest investments you can make to recession-proof your life is obtaining an education. Those with a bachelor’s degree or higher have a substantially lower unemployment rate than those with a high school diploma or less during recessions.
“Education is always being emphasized by economists,” Sinclair argues. “Even if you can’t build up a financial cushion, focusing on ensuring that you have some training and abilities that are broadly applicable is quite important.”
In a worldwide recession, what happens?
A global recession is a prolonged period of worldwide economic deterioration. As trade links and international financial institutions carry economic shocks and the impact of recession from one country to another, a global recession involves more or less coordinated recessions across several national economies.
Do wars induce economic downturns?
The majority of wars in history have occurred in response to economic crises; there have been very few instances in which the world has experienced a slowdown or recession as a result of hostilities. After the First World War, the economy went into a three-year slump from 1918 to 1921.