It’s been slightly over a year since the first case of Covid-19 was detected in the city of Wuhan in China. The World Health Organisation (WHO) declared the outbreak a Public Health Emergency of International Concern in January 2020 and a pandemic in March 2020. Soon lockdowns were imposed and movement restrictions were announced across the globe and the terms quarantine, pandemic, social distancing etc. became a regular part of our daily conversations. What we thought was a brief hiatus from our busy lives due to movement restrictions has turned out to be the “new normal”.
The economic consequences have been severe, to say the least. The pandemic led to widespread postponement and cancellation of events, shortages of food and essentials due to massive public hoarding and panic buying. Educational institutions were partially or fully closed and a switch was made to virtual learning. Widespread misinformation along with discrimination and xenophobia have been reported. The pandemic has also expanded the social differences within society, pushed more people into poverty, and has led to a huge income disparity between various sections of society. The latest report by the world bank suggests that an additional 88 million people will live in extreme poverty in 2020 as a result of the pandemic and that this number could rise to 115 million as a result of the Covid-19 outbreak.
Severe economic contraction
The economic recession caused by Covid-19 is very different from what we've seen in recent history. The recession hasn’t been caused by a financial crisis but a world-wide health crisis. It’s been regarded as one of the worst global economic crisis since the great depression in 1929. Global stock markets experienced their worst fall since 1987, and G20 economies fell by 3.4% in the first quarter of 2020 on a year on year basis. From the month of April - June 2020, the International Labour Organisation (ILO) estimated that 400 million full-time jobs were lost. Income earned by workers globally fell by 10% in the first nine months of 2020 leading to a loss of $3.5 trillion. The United Nations Development Program (UNDP) predicts a $220 billion reduction in revenue for developing countries. Modeling by the World Bank suggests that certain economies will not make a full recovery at least until 2025. The economic crisis also witnessed a historic free-fall in the prices of crude oil with the Western Texas Intermediary (WTI) falling to -$37/barrel and Brent crude falling to $18/barrel. Never before in recorded history did oil prices fall to such lows. In the month of June 2020, the International Air Transport Association (IATA) said that airlines as a collective had lost $84.3 billion and income will continue to be negative in 2021.
Inequalities and social differences grow
The pandemic brought a grinding halt to the normal functioning of schools and educational institutes. As governments in 192 countries tried to curb the spread of the virus, 1.5 billion school going students were sent home. For girls in poorer countries, the abrupt closure of schools might signal the end of their schooling career altogether. During the Ebola outbreak, girls were exposed to severe sexual exploitation, teen pregnancies, forced marriages, and an increasing burden of house chores. This resulted in an increase in school dropouts, especially in Sierra Leone, Liberia, and Guinea, the three worst affected by the Ebola outbreak. The Malala fund analysis states that if similar patterns are repeated then we can expect as many as 20 million girls to never return to school. This is in addition to the 129 million girls who have already been deprived of education.
Parents have now realized the importance of good teachers, schools, and holistic education. Governments too are realizing that through the education of society, the economy flourishes and development takes place rapidly. We need to come together and urge our leaders to turn this crisis into an opportunity. Education shouldn’t be regarded as a privilege, rather a basic human right.
We are at a critical juncture of humanity where inequalities of all sorts are set to rise, undoing all the good humanitarian work that has been done since the start of the century.
Going back 3 decades in poverty reduction
According to the world bank’s blog, through its data and projections, it appears that Covid-19 has already been the worst reversal on the path towards the goal of global poverty reduction in the last 3 decades. The only other crisis that has increased global poverty in the last 30 years was the Asian Financial Crisis in 1997-1998. While the Asian financial crisis raised the poverty levels by 1.3% in 1998 relative to 1997 (from 29.6% to 30%), the COVID-19 pandemic is expected to increase poverty by 8.1% in 2020 relative to 2019 (from 8.4% to 9.1%). While the poverty levels will rapidly decline on an average of 3.8% every year for the next 5 years, the Covid-19 pandemic is still evolving and growing and its long-term forecasts are still yet to be made. For us to curtail the spread of the virus and protect humanity from further damage, we need an effective and affordable vaccine.
The end of the pandemic would also mean that our healthcare systems are no longer overwhelmed. Healthcare workers have been instrumental in saving lives and are at the forefront when it comes to fighting the virus. The Covid-19 crisis has also forced healthcare experts and governments to rethink the way they’ve designed their healthcare systems. There is definitely going to be a change in the way healthcare will be provided and availed.