Top 10 Countries Whose Economy Will Be Massively Affected By Covid-19
Covid -19 and The Consequences
Like never before, the world as a whole was oblivious of the danger of the global COVID-19 outbreak. The global pandemic has long-reaching effects on many areas of our lives, particularly on the world’s economy. Many countries in the world are greatly affected and the big question is how to get over the retardation brought by the COVID-19 pandemic. The COVID-19 outbreak has since spread to about 196 countries of the world and territories in every continent. Aside from the health devastation and mortality imposed by the disease, the economic uncertainties, and disruptions are also part of the significant cost to the global economy. The world economy is totally paralyzed, and like never before little can be done to salvage this during the outbreak. Countries with high production capacities now have a remarkable reduction in their production as against the usual.
Great nations with the massive economy have lost a huge amount of income from exportation and importation due to the lockdown imposed by the pandemic, advanced countries like Italy, Spain and most Euro-zone economies have recorded drastic fall in demand for their products especially oil-producing nations like Nigeria. Countries whose economy solely depend on oil production and exports are some of the most badly affected nations as the demand for oil at this time is estimated to have fallen by millions of barrel each day.
For most developing economies, the global coronavirus outbreak puts severe pressure on the economy, forcing them into a downtime. The earlier revenue expectations and fiscal projections by most countries have to be taken into deep consideration and review following the emergence and spread of the virus. It is expected that many nations will make less than the proposed revenue for the year, consequently, there is obvious need to reduce the proposed expenditure for the year.
The various economic and growth programs aimed at increasing social inclusions, such as rising employment level, caring for the vulnerable and poor people are at the mercies of the urgent restoration of the world from the outbreak. Advanced countries like United Kingdom, United States, Germany, Canada and a lot more are expected to have a significant level of reduction in international students’ enrolment. International Students contribute greatly to the success of many nations, particularly to their economy. International Students pay almost three times the regular tuition paid by native students thereby enriching their economy. Aside from that, the skills and manpower contributed is also exceptional. With COVID-19, universities and colleges welcoming international students are expected to experience a fall in the enrolment and consequently, its effect could be evident in the nation’s economy as well.
Impact on the World’s Economy
As factories shutdowns and quarantine measures spread across the globe, restricting movement and commerce, business owners and entrepreneurs are struggling to cope. Different strategies and methods have been put in place to ensure continuity. Unemployment level keeps rising by the day as many companies are no longer able to pay their staff. Many countries are providing support materials and unemployment benefits to their people following the economic shutdown.
In the US, Commerce Department reported a rapid decline in the gross domestic product (GDP) in the first three months of the year, a decline of about 4.8 percent which signals a very massive drop since 2007. No doubt, coronavirus has hit the economy of many great nations badly with the inclusion of the US, the nation with one of the best economy. To further illustrate the wide-reaching effects of the outbreak, here below are some of the areas contributing to the economy is greatly influenced:
- Employment: The number of Americans who have filed for unemployment has skyrocketed. In India, lockdown resulted in million job losses ever since lockdown was imposed. Majority of those who lost their jobs are petty traders and artisans. Many people are gradually losing their jobs while some companies are offering a pay cut. If the lockdown persists, it is expected that the rate of unemployment will continue to rise as many organisations will not be able to pay their workers.
- Air travel restrictions: the International Air Transport Association (IATA) predicted the COVID-19 outbreak could cost airlines $113 billion in lost revenue, as fewer people travel at this time. Many airlines have lost a huge amount of money ever since the beginning of the pandemic. Many countries have placed travel ban and restrictions on travellers, airlines no longer have passengers to transport to different destinations. Aside from airline companies, many tourism industries have considered folding up as there are no more passengers to tour with.
- Commerce Disruption: coronavirus has enormously disrupted many areas, especially commerce and production arm of many nation’s economy. China, one of the largest contributors to the world’s economy were the first and in fact the initial epicentre for the disease outbreak. The initial shortage of products and parts from China affected companies around the world. Many factories delayed opening after the Lunar New Year and workers stayed home to help reduce the spread of the virus. Many international trades, events and activities of economic impacts have been stopped due to the virus. Most essential factories around the world, especially in Italy, Germany, the US and China have been closed.
- Reduction in world population: manpower is an important force for production, although many activities performed by humans lately are now being replaced with machines, it did not undermine the powerful roles of human manpower in contributing to world economic growth. Many professionals and unskilled labour have lost their lives during the outbreak, which means organisations and companies will need to seek for more people.
Top 10 Countries Whose Economy Will Be Massively Affected By Covid-19
There are a number of factors put into consideration by the International Monetary Fund (IMF) before ranking nations as one of the most powerful economies. IMF is an international body with headquarter in Washington, D.C., it consists of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world while periodically depending on the World Bank for its resources. Predominantly, the IMF works to improve the economies of its member countries. According to the IMF, the top ten countries with the best economy were ranked based on their GDP.
The COVID-19 pandemic is slowly diminishing the world’s economy as in a matter of weeks, the contagious disease has pushed the various countries of the world to the brink of a recession and financial crisis. The World Trade Organization has forecast that nearly all countries of the world would suffer declines in finance and trade this year. Some of the top countries whose economy would be affected by the COVID 19 are explained below:
- China: which is the world’s second-largest economy has suffered from the outbreak of the coronavirus pandemic starting from the city of Wuhan in 2019. The several weeks of lockdowns imposed on the citizens by the government have caused a steep in the declines in the manufacturing, factory output, retail sales, construction, and other economic activities of the country and all these are the main economic growth of the country. This is the first economic contraction experienced by China in the last forty years. China with a Nominal GDP of $14.14 trillion, has been an economically growing country with manufacturing and exporting hubs across the country.
- Germany: the advent of the COVID 19 would definitely affect the German economy this year for the first time since 2009. Most German companies have now made their employees join a short-term government work program intended to prevent mass layoffs which is bound to occur because there is no activity whatsoever going on due to lockdowns. Funds have now been spent to bail out struggling businesses, including by making unlimited loans and potentially taking equity stakes to counter the economic fallout from the coronavirus. Germany with a Nominal GDP $3.86 trillion is one of the most formidable economies in Europe. As of 1980, the country was pronounced the third-largest economy. Following the post-2009 general financial crisis, the economy suffered some major setbacks which affected their economy.
- Japan: economists have also predicted that Japan would be among the too countries of the world who would be affected by the COVID 19 saga. The economy is believed to shrink by around 3% this year. The deep impact of the pandemic comes on the heels of an economic slowdown from a sales tax hike. The virus has now also forced the Japanese government to postpone the Summer Olympics which was supposed to take place until next year. Just like other top countries of the world, the Japanese government has responded to its citizens with a massive relief package, worth almost $1 trillion, to help the country through one of its most challenging periods at this time. Not only Japan but also other countries of the world is facing one of the biggest crises since world war 11. Japan with a Nominal GDP of $5.15 trillion, is also one of the largest economies in the world. Japan has been faced with so many financial setbacks coupled with earthquakes which have toppled the country’s economy. Japan was hoping to boost its economy with them hosting the Olympics in 2020 but unfortunately, the COVID 19 has shattered that plan till next year.
- United Kingdom: economist has predicted that the British empire would suffer about 10% break in its economy this year. The COVID 19 pandemic has paralyzed the country’s economy so much and they are in search of interventions and easy to salvage the present economic situation. Among some of the country’s emergency measures, is to pay about 80% of workers’ salaries for several months to keep companies from resorting to huge layoffs which may occur due to extreme lockdowns. For self-employed workers, a loan program has been put in place to enable them to access funds during this period in order not to increase the number of unemployed people. It has also provided rescue aids to charities. The Bank of England has dropped its benchmark interest rate to 0.5% to help lenders. United Kingdom with a Nominal GDP of $2.83 trillion, since the 20th century. The UK experienced an uptrend, however, their output has been experiencing a decline over a period of five consecutive quarters. The services sector, which contributes more than 75% of GDP in the UK, which means that the economy is predominantly service sector driven. The manufacturing the second productive sector, followed by agriculture. Even with that, agriculture is not a major contributor to its GDP, about 60% of the U.K.’s food needs are produced domestically. In other words, they do not expend too much on food export.
- United States: with a Nominal GDP of $21.44 trillion, the US has always been the country with the best economy since the 19th century. In essence, the largest part of the world economy is being significantly influenced by the US. Because of their advanced infrastructure, technology, and an abundance of natural resources the economy constitutes almost a quarter of the global economy. However, in terms of purchasing power parity (GDP-PPP). Due to the COVID 19 pandemic, the amount of US unemployed workers have risen to about 40% which is more than the average. Washington has been credited with moving decisively to stabilize the financial markets. In March, the Federal Reserve has put in place some actions to enable it’s citizens survive this lockdown by cutting interest rates close to zero, reducing bank reserve requirements to zero, rapidly purchasing nearly $2 trillion in Treasury bonds and mortgage-backed securities, buying corporate and municipal debt, and extending emergency credit to non-banks. The country has also put in place necessary things aimed at providing relief to small businesses and more aid to hospitals.
- India: with Nominal GDP $2.94 trillion, they are the fastest growing trillion-dollar economy. The Indian economy was just ranked 13th on the list globally in 1980. Manufacturing remains as one of its crucial sectors and is being given due push via the governments’ initiatives, such as “Make in India.” Their economy chiefly depends on less dependence on exports, high saving rates, favourable demographics, and a rising middle class. In India now and some parts of Pakistan, they have also experienced the compulsory lockdowns imposed by the government. Therefore, the cut in GDP and incomes would be severe. This fall in the country’s growing economy would cause severe hardship on the poorest section of the population, such as daily workers and labourers in the cities and in rural areas.
- Nigeria: due to the COVID 19 pandemic, the Nigerian economy which is one of the developing economics of the world has suffered greatly. With an increase in layoffs and unemployment, the country is set to be on the verge of economic collapse. With most of its citizens, daily workers and mostly self-employed, it becomes a big challenge for them to survive at all. In February of 2020, the IMF revised the GDP growth rate from 2.5% to 2%, as a result of relatively low oil prices and limited fiscal space. There has also been a decrease in the prices of oil, which is one of Nigeria’s financial stand. The impact of the COVID-19 outbreak has made it more difficult for the government to weather the crisis. With the lockdown imposed by the Nigerian government on its citizens, food is now an essential commodity for people to stay at home but the decrease in employment has affected the income-generating capacity of people and, thus reducing their consumption expenditure. Although, the government have tried to support its citizens with palliatives, of course, it doesn’t go round even to the poorest of the poor. Aside from the food issue, the government purchases will also increase as governments, which typically can afford to run budget deficits, utilize fiscal stimulus measures to counteract the fall in consumer spending. Other measures which have been put in place by the Nigerian government is to inform the Central Bank of Nigeria (CBN) to organize a fiscal stimulus package, of about 50 billion naira ($138.89 million) as credit facilities to poor households who needs to survive through this pandemic and small and medium enterprises who are most affected by the pandemic. Also, a 100 billion naira ($277.78 million) loan has been approved to the country’s health sector and a 1 trillion naira ($2.78 billion) to the manufacturing sector of the country too.
- France: with a Nominal GDP of $2.71 trillion, France is a well known country that has attracted so many visitors over the years because of its vast culture which acts as a tourist site for visitors. In fact, France is the biggest destination and the most visited country in the world either by international students, honeymoon destinations and for tourism. It is the third-largest economy in Europe. The country has a high standard of living and in recent times, the rate of unemployment has risen due to the increase in the cases of the COVID 19. France is a leading agricultural producer, accounting for about one-third of all agricultural land within the European Union. France is the world’s sixth-largest agricultural producer and the second-largest agricultural exporter, after the United States.
- Italy: Italy has remained one of the prominent members of the Eurozone and with Nominal GDP of $1.99 trillion. Before the advent of the COVID 19, Italy has been facing deep political and economic chaos while its unemployment rate continues to rise and it’s worse during this time of the year. On the brighter part, their economy is being positively driven by exports and business investments but due to the Corona virus and various air and seaports are shut down, the economy is now on the downside with not much to give. The death toll in Italy is one of the world’s most devastating news and they are in need of help both financially and medical term.
- Brazil: with Nominal GDP of about $1.85 trillion currently. Brazil remains the largest and most populous nation in the whole of Latin America. However, Investment and business have been hit by a series of internal challenges faced by the country. Issues of corruption and political instability has greatly affected their business and economic sector and now with the emergence of the COVID 19 diseases, the country is set to suffer drastically on its economic growth. Just like its other world counterparts, Brazil has also set and out in place various measures to help its citizens survive through this ordeal and also they are looking for the way forward to salvage the pandemic effects.
Due to the lockdown, many economies are shaky and under intense threat of crumbling. The outbreak of Covid-19 pandemic all over the world has disturbed and scattered all laid out plans and aspects of the world. From the political, social, economic, religious and financial structures of the whole world putting them in disarray and fear of what the future holds. The world’s topmost economies such as the United States, China, United Kingdom, Germany, France, Italy, Japan and many others are at the verge of collapse. Many countries have now woken up from their slumber and have begun to consider the way forward.
However, the major countries with the largest economy are some of the most affected by this pandemic and also the imposed lockdown as major sectors of their economy are on hold currently. The impact of the coronavirus pandemic is immeasurable and the effects continue to rise, therefore, all countries and regions of the world need to work together with cooperation and coordination to protect the human lives which so much have been lost already as well as search for ways to limit the economic damages it has caused and continues to cause. For instance, the lockdown put in place has been used to restrict various businesses and organizations as well as travelling out of the states or country in order to contain the virus and bring it to an abrupt halt as the search of the Corona virus cure is been done globally.