Covid-19 pandemic has sent the global economy into one of its worst recessions ever, and it isn’t yet clear when a full recovery will be in place. Progress on coronavirus vaccines has brightened the economic outlook, but some economists said a potentially slow rollout of vaccines across developing economies could hamper the return of activity to pre-pandemic levels. Even among advanced economies, renewed lockdowns in Europe in a bid to stave off a resurgence in infections could push back economic recovery, according to economists. Rapid spread of Covid which was first detected in China forced many countries into months of lockdown in 2020 that markedly reduced economic activity. Gross domestic product the broadest measure of activity plunged to record lows across many economies. The International Monetary Fund forecast the global economy could shrink 4.4% this year, before bouncing back to 5.2% growth in 2021.
Feature of coronavirus lockdowns around the world is the complete or partial closure of borders, which brought much of international travel to a halt. Major consequence of the pandemic-induced economic slump is an increase in job losses globally. The Organization for Economic Co-operation and Development, an intergovernmental entity, said that in some countries, the early effects of Covid-19 on labor markets were ten times larger than that observed in the first months of the 2008 global financial crisis. Governments have increased spending to protect jobs and support workers. Globally, government measures to cushion the pandemic’s economic blow totaled $12 trillion. Such staggering levels of spending have pushed global public debt to an all-time high but governments should not withdraw fiscal support too soon. Central banks in advanced economies including the Fed and the European Central Bank have also increased their asset purchases to inject more money into the financial system. That’s a move also adopted by an increasing number of central banks in emerging markets as they explore ways to support their respective economies hit hard by the pandemic.