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Economic impact of the COVID-19 pandemic

The COVID-19 pandemic has had far-reaching economic consequences[1] including the COVID-19 recession, the second largest global recession in recent history,[2] decreased business in the services sector during the COVID-19 lockdowns,[3] the 2020 stock market crash, which included the largest single-week stock market decline since the financial crisis of 2007–2008 and the impact of COVID-19 on financial markets,[4][5][6][7][8][9] the 2021–2023 global supply chain crisis,[10] the 2021–2023 inflation surge, shortages related to the COVID-19 pandemic including the 2020–present global chip shortage, panic buying,[11][12][13][14] and price gouging.[15] It led to governments providing an unprecedented amount of stimulus. The pandemic was also a factor in the 2021–2022 global energy crisis and 2022–2023 food crises.

For an associated topic, see COVID-19 recession.

Possible instability generated by an outbreak and associated behavioural changes could result in temporary food shortages, price spikes, and disruption to markets. Such price rises would be felt most by vulnerable populations who depend on markets for their food as well as those already depending on humanitarian assistance to maintain their livelihoods and food access. As observed in the 2007–2008 world food price crisis, the additional inflationary effect of protectionist policies through import tariffs and export bans could cause a significant increase in the number of people facing severe food insecurity worldwide.[16]


Many fashion, sport, and technology events have been canceled or have changed to be online.[17][18] While the monetary impact on the travel and trade industry is yet to be estimated, it is likely to be in the billions and increasing.


Amidst the recovery and containment, the world economic system is characterized as experiencing significant, broad uncertainty. Economic forecasts and consensus among macroeconomics experts show significant disagreement on the overall extent, long-term effects and projected recovery.[19] Risk assessments and contingency plans therefore must be taken with a grain of salt, given that there is a wide divergence of opinion. A large general increase in prices was also attributed to the pandemic. In part, the record-high energy prices were driven by a global surge in demand as the world quit the economic recession caused by COVID-19, particularly due to strong energy demand in Asia.[20][21]


The COVID-19 crisis affected worldwide economic activity, resulting in a 7% drop in global commercial commerce in 2020. While GVCs have persisted, several demand and supply mismatches caused by the pandemic have resurfaced throughout the recovery period in 2021 and 2022 and have been spread internationally through trade.[22][23][24]


During the first wave of the COVID-19 pandemic, businesses lost 25% of their revenue and 11% of their workforce, with contact-intensive sectors and SMEs being particularly heavily impacted. However, considerable policy assistance helped to avert large-scale bankruptcies, with just 4% of enterprises declaring for insolvency or permanently shutting at the time of the COVID wave.[22]

Population growth[edit]

COVID-19 increased mortality around the world, with the UN estimating that there were 15 million deaths due to COVID-19 in 2020 and 2021. This estimate was broadly in line with other estimates of 14.9 million from World Health Organization and 17.6 million from The Economist.[76]


While COVID-19 increased mortality in general, different countries experienced dramatically different impacts on birth rate. Birth rates in the US declined, whereas Germany's reached an all-time monthly high.[77] Some in China had initially thought that their COVID-19 lockdowns would boost birth rate, but that prediction was proven wrong.[78]


US population growth fell to a record low of 0.1%.[79] In Australia, overall population growth slowed dramatically due to decreased migration, however, births did not appear to be impacted dramatically.[80]

Medicine[edit]

The pandemic led to a boom in medicine-related elements such as plastic surgery.[3]

severe effects because tourism depends on travel

quarantine restrictions

fear of airports and other places of mass gathering

fears of illness abroad

issues with cross-border

medical insurance

tourism enterprise bankruptcies

tourism industry unemployment

cost increases

airfare

damage to the image of the industry

cruise

Philia Tounta summarised likely effects of COVID-19 on global tourism early in March 2020:[198]

Events and institutions[edit]

The pandemic has caused the cancellation or postponement of major events around the world. Some public venues and institutions have closed.[199]

Gambling and betting[edit]

According to the American Gaming Association, the industry will be hit by losses up to $43.5 billion in economic activity in the following months. Some projection was that the sports gambling industry may lose $140 million alone in the fourth weekend of March (21–22 March 2020) on lost NCAA basketball tournament bets.[210] Gambling companies are eager to shift customers from retail into online casino and poker games to fight the loss of revenue due to the cancellation of sports fixtures and the shutdown of betting shops. Gambling groups increased the advertising of online casino games and play on social media. Some argue that virtual racing, as well as draw based games, are also proving popular.[211][212] Some software betting providers have specially designed campaigns promoting online betting solutions to attract betting companies. Long term consequences to the betting and gambling industry might be: Death of small retail operators and providers, increase in M&A, more focus on online, innovation in online meaning that even the existing products like the sportsbook will pay closer attention to obscure sports like soap soccer or quidditch and more prominent spot for virtual games online.[213]


In Macau, the world's top gambling destination by revenue, all casinos were closed for 15 days in February 2020[214] and suffered a year-on-year revenue drop of 88%, the worst ever recorded in the territory.[215]

Impact by gender[edit]

Around the world, women generally earn less and save less, are the majority of single-parent households and disproportionately hold more insecure jobs in the informal economy or service sector with less access to social protections. This leaves them less able to absorb the economic shocks than men.[236][237][238][239][240][233][241] For many families, school closures and social distancing measures have increased the unpaid care and domestic load of women at home, making them less able to take on or balance paid work. The situation is worse in developing economies, where a larger share of people are employed in the informal economy in which there are far fewer social protections for health insurance, paid sick leave and more. Although globally informal employment is a greater source of employment for men (63 per cent) than for women (58 per cent), in low and lower-middle income countries a higher proportion of women are in informal employment than men.[236][237][238][239][240][233][241] Unlike previous crisis', the COVID-19 pandemic affected more women dominated industries rather than male dominated industries: women were in the forefront in the fight against COVID-19 as most healthcare workers are women.[242]


In Sub-Saharan Africa, for example, around 92 per cent of employed women are in informal employment compared to 86 per cent of men. It is likely that the pandemic could result in a prolonged dip in women's incomes and labour force participation. The ILO estimates global unemployment to rise between 5.3 million ("low" scenario) and 24.7 million ("high" scenario) from a base level of 188 million in 2019 as a result of COVID-19's impact on global GDP growth. By comparison, global unemployment went up by 22 million during the Great Recession. Women informal workers, migrants, youth and the world's poorest, among other vulnerable groups, are more susceptible to lay-offs and job cuts. For example, UN Women survey results from Asia and the Pacific are showing that women are losing their livelihoods faster than men and have fewer alternatives to generate income. And, in the U.S., men's unemployment went up from 3.55 million in February to 11 million in April in 2020 while women's unemployment – which was lower than men's before the crisis – went up from 2.7 million to 11.5 million over the same period, according to the U.S. Bureau of Labor Statistics. The picture is even bleaker for young women and men aged 16–19, whose unemployment rate jumped from 11.5 per cent in February to 32.2 per cent in April.[236][237][238][239][240][233][241]


In Japan, women have been disproportionately hit by the Covid pandemic because sectors like retail and hospitality employ many women and have been heavily affected by the pandemic recession. According to the health ministry, the suicide rate among Japanese women rose 14.5% in 2020, while it fell by 1% among men.[243]

Economic inequality[edit]

Since most of the workforce who preserved their jobs had the option of switching to an online modality, and the online workforce is considerably higher paid on average, the pandemic exacerbated income inequality by hitting harder on low-paid workers.[244][245]

COVID-19 recession

Contactless payment

Distance learning

Financial market impact of the COVID-19 pandemic

Remote work

Shortages related to the COVID-19 pandemic