The world economy is on course to contract 4.5% this year despite the pandemic, says OECD
The world has seen one of the worst recessions in 2020. The Covid-19 pandemic that broke out all of a sudden without a warning closed doors, including the economy. However, the biggest surprise is that the economy bounced back to normal stronger and sooner than expected.
Almost all businesses were shut during the lockdown period. Only big conglomerates who worked remotely escaped the fall of company revenue. All other sectors that needed physical labour fell flat during the two or three-month period. People were expecting a bad outcome from what was visible to their eyes. Every industry and company reported a plummet in its value. The beginning of the pandemic and the outcome that was recorded back then scared everyone about a recession like in 2008. Ultimately, it was not the case. According to the Organisation for Economic Co-operation and Development (OECD), the global economy appears to be recovering from the coronavirus recession faster than thought only a few months ago. The organisation also gave most of the credit for the bounce back to the improving outlook of China and the United States. The OECD said that the world economy is on course to contract 4.5% this year.
Henceforth, let us look at ways on how economy came back to normal and how diverse sectors contribute to the upswing.
Economy: The upwards path after lockdown
No one can conclude that all sectors went down the track when Covid-19 lockdown began. However, every industry had its pros and cons from its side. One of the major reasons for the sudden recovery is that people started thinking of the necessary foundation they could lay before a second recession. Even though when normal life returned, the coronavirus cases keep spiking.
So it is more likely that people fear there could be a second wave of attacks and lockdowns that might follow. However, the recovery can be divided into three parts, which were impacted very differently given the nature of the virus-driven recession.
The unaffected sector: Remember what happened eight months ago? Even though when the income was radically less or even none, no one can stop spending on the basic utility expenses. This includes food, sanitation, housing, financial services, etc. This amounts to almost 46% of the US consumption and never dipped.
Sectors affected by lockdown: Manufacturing of non-essentials, construction and other durable goods were among things that got a hard hit during the pandemic. However, when people started moving out of their homes, these sectors came back close to the normal scenario. This accounts to about 16% of the US consumption.
Doors shut until vaccine emergence: There are some other fields that can’t resume due to the fear of creating Covid-19 clusters. It includes transportation, food service, education, etc. Some of these bounced back to pre-crisis level after the lifting of lockdown, while others like education is hoping for a meaningful recovery. These sectors represent about 38% of the US consumption.