The world enters 2020 with slight optimism after a tough year in 2019 when global growth reached its lowest point in a decade. Not knowing what lies ahead, the global financial market was bullish with surges of inflows towards emerging economies in the last quarter of 2019. Then by March 2020, the financial market had finally priced in the full impacts of COVID-19.
The pandemic occurs on the backdrop of heightened trade and 5G technology wars, geopolitical tensions, as well as lack of strong global leadership. Physical distancing and restrictive mobility measures, instituted as part of the pandemic response, have brought dire economic consequences. There have been 14 global recessions in the past 150 years, this recession has been billed as the worst since World War II.
Before the COVID-19 crisis hits, the world has managed to make progress in different fronts towards the Sustainable Development Goals. Global poverty fell to 10 percent in 2015 from 36 percent in 1990 and there have been important gains in gender equality since the adoption of the Beijing Declaration and Platform of Actions back in 1995.
Sadly, we are now seeing many years of economic development and human capital gains regressing. The World Bank estimated that up to 100 million people fell into poverty as a result of the current crisis. The poor, the vulnerable, and women are disproportionately affected as some labor-intensive and interaction-sensitive sectors are hit hard by the “freeze” in economic activities.
The financial market has regained after a rough volatile period last March and April. The S&P 500 reached an all-time high even during the pandemic supported by low-interest rate, extraordinary monetary expansion and fiscal stimulus. The real sectors, however, are still struggling to revive and avoid bankruptcy. The surviving companies will be those that are the most efficient, most adaptative to the new technology as well as the new way of working during and post-pandemic. The surviving industries are likely to roll out the use of robotics, automation and artificial intelligence to cut and to minimize risk to labor forces and supply chain disruptions. This will create a wider gap between skilled and unskilled labor.
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