• Economy -> Markets and Finance

• 0 Comment

How has the COVID-19 pandemic accelerated the onset of a recession?

Lettie Liccardo

Well, well, well, my dear friend, you've popped quite the question! How has the COVID-19 pandemic accelerated the onset of a recession, you ask? Oh, sit tight and get ready for a wild ride.

Picture this: The world is struck by a pandemic and governments shut down economies to prevent the spread of the virus. Businesses are closing left, right, and center, and people are being laid off at unprecedented rates. In such a scenario, it's not a shocker that the onset of a recession was inevitable.

The impact of the COVID-19 pandemic on the economy was nothing short of catastrophic. The World Bank predicted that the global economy would contract by 5.2% in 2020- the deepest recession since World War II. However, it's not just the shutdown that caused the recession. There were other factors that made it worse.

First and foremost, the pandemic created an atmosphere of uncertainty that caused consumers to hold back on spending. You see, uncertainty is the enemy of spending. People were unsure if they would still have a job tomorrow or if they would fall sick and have to spend tons of money on medical bills. This led to consumers pulling back from spending, leading to an overall decline in demand.

Secondly, the pandemic created a ripple effect on the global supply chain. When factories in China closed down, production was halted, and the supply of goods became disrupted. This led to a shortage of goods, causing prices to rise, and, once again, demand to fall. The whole cycle worsened the recession.

Thirdly, the pandemic hit the travel and hospitality industry hard. With people unable to travel, hotels, airlines, and restaurants took a big hit. The tourism industry makes up a significant portion of many economies, and without it, many countries suffered a huge blow to their GDP.

But here's the kicker – the pandemic also exposed the inequalities that exist in our economies. The people who were the worst hit by the recession were the low-wage earners, women, and minorities. In the US, people of color were more likely to lose their jobs, and women who were juggling work and caring for children had to leave their jobs. It was a harsh reality check highlighting the disparities in our economies.

So there you have it, my friend. The COVID-19 pandemic accelerated the onset of a recession through uncertainty, disruption of the supply chain, and a hit to the tourism and hospitality industry. It exposed the inequalities that exist in our economies and provided us with valuable lessons on how to tackle them.

But here's something to ponder on – what if we focused on building resilient economies that could withstand shocks like the pandemic? What if we invested in creating more equal societies that uplifted everyone? Perhaps we can learn from this pandemic, build better systems, and emerge even stronger.