The COVID-19 pandemic brought about a severe negative impact to the world economy, which can only be compared to that experienced in the Great Depression. Across the board, economies, businesses and individuals were hit, and practically everyone was impacted either directly or indirectly. In this article, we shall be discussing how the economy was impacted throughout the COVID-19 pandemic.
Restrictions and unemployment
The COVID-19 lockdowns and restrictions brought several industries to their knees, with little option but to part with employees to reduce salary expenses. The most impacted industries that come to mind include aviation and hospitality, which have suffered a severe shock as businesses were brought to a standstill for a time. In view of the unprecedented halt, governments had to interfere with wage support schemes to prevent mass lay-offs and redundancies. Till this day, these industries have not yet recovered to pre-pandemic levels and operate with an element of uncertainty, considering that they were the hardest hit.
Troubled consumer sentiment
In view of the uncertainty, consumer spending took a hit as most people were insecure to invest money. During the harder months of the pandemic, liquidity and deposits reached certain levels locally in view of the fact that people were saving money instead of spending and investing. Till today, consumers are still sceptic about spending money when it comes to travelling for example due to quarantine and that high numbers of cases are being registered. This impacts the economy and more specifically, certain industries.
Following the lifting of several restrictions globally and the resumption of business activities, one could easily notice a high degree of inflation. Prices of food items and material pertaining to construction and finishes have increased significantly. One example is steel which saw a remarkable spike in its price and value. The inflation levels have many economists concerned as left uncontrolled it can cause several problems and social issues. Those who cannot keep up with the prices will be left out, entering into poverty if they remain with the same income. The higher prices are being spurred on by increased demand and low supply. The chains of supply are no longer as effective and fast as they once were prior to the pandemic.
In order to assist people in maintaining income during the hard lockdown months, governments have had to fork out significant funds, increasing public debt and deficit. A country like Malta which boasted surplus after another just a few years ago, has now entered into a phase of deficit. The reason for this is to cushion the impact of the pandemic on businesses and families, maintaining a low unemployment rate.
How do you think the pandemic has impacted the economy? Let us know your views in the comments section below.