Impact of Covid-19 on global economy

The novel coronavirus (Covid-19) is an unprecedented crisis that has never been experienced before. The pandemic first broke out in Wuhan, China and made its way throughout the world, killing millions of people in the process. The virus had impacted more than 210 countries. Almost one hundred million Covid-19 cases were reported in January 2021 alone worldwide. Furthermore, the lack of health supplies such as test kits, face masks, etc further hindred the process of recovery in certain countries. This caused a major setback on the global economy.

To further understand the impact of Covid-19 pandemic on the global economy, UTAR students, enrolled in MPU34152 Leadership and Teambuilding subject, held an online interview with Faculty of Accountancy and Management lecturer Lee Sin Yee on 20 February 2021 via Zoom. The objective of the interview were to enlighten the participants on the impact of Covid- 19 on the global economy,  Gross Domestic Product (GDP), consumers demand and other major industries.

 

The comparision of countries’ population and their confirmed cases as of 18 November 2020

“GDP can be defined as the final value of the goods and services produced within the geographic boundaries of a country during a specified time period. The GDP is crucial to evaluate the economic state of a country. So, if the GDP is higher, the economy is in a good state,” Lee said as she provided the definition of GDP.

Statistic showing the global growth from 2009 to 2021

She reported, “In 2019, the global economy grew about 2.9% compared to the previous year. Moving forward to 2021, world economists assumed that there will be a rebound from the year before. So, what is the major impact? First and foremost, the consumer demand has plunged. In October 2020, the global Purchasing Managers’ Index (PMI) for the export order was 51.2% compared to 53% for manufacturing. It shows a slight decrease from September 2020. In September 2020, the global trade of goods increased by 2.1% compared to the previous month. This was followed by an increase of 2.4% from July to August 2020.”

Speaking of the reduction in consumers demand, she said, “Most of the industries had to drop its global production entry. This is because the economic damage caused by the pandemic was largely driven by the fall in demand. This can be related to industries such as travel and tourism. How do you travel when there is a lockdown? According to the Mobility Market Outlook on Covid-19, the global revenue estimated for travel and tourism industry was around US396.37billion in 2020; that is a decrease of 42.1% from the previous year which is indeed a huge decline in revenue.”

Focusing on Malaysia’s growth, she said, “The World Bank expected Malaysia’s growth to resume in 2021 at 6.9%. However, in January 2021, Malaysia reported 204,000 confirmed cases and it was continuously experiencing a spike in Covid-19 infection. Hence, Malaysia had to implement a lockdown to curb the spread of the virus.”

She added, “Despite the dire condition, Malaysian government introduced various stimulus packages such as Prihatin Rakyat, Penjana, loan, moratorium and debts relief to offer assistance to the people. The government stimulus packages and the short-term economic recovery plans managed to soften the impact of the Covid-19 pandemic and pave a path towards economic recovery. The Malaysian government has supported the supporting relief and recovery effort by deepening the social assistant for the lower income group.”

She advised, “So, is it a good time for investment? Some investments are safe and some can be risky. You may consider purchasing a house since the house prices are decreasing.”

“The Covid-19 virus does not only cause physical illness but mental illness as well. Senior citizens and people with pre-existing medical conditions such as high-blood pressure, heart disease, diabetes, etc tend to be more vulnerable,” Lee said and added, “We cannot determine when this pandemic will end. Paul Brockman, a famous economist, expressed some optimism in his newsletter stating if we are patient and disciplined, we could probably see a rapid recovery.”

 

A group photo of Lee with UTAR students

Lee advised, “We should be more practical and be more aware of how to manage our expenses after facing this pandemic. Lockdown does not mean your freedom is locked down. This is done for all to contain the virus. Many companies had to shut down their business because they can’t earn or sell their products. Hence, business owners and workers are the most vulnerable group of people. There are no options for them.”

She added, “We should consider working from home as most of the job are done online these days and remember, hygiene is very important. When you walk into a supermarket, you need to scan and check your body temperature. This is the new norm, our new normal lifestyle; learn to adapt to this new lifestyles. In conclusion, the pandemic has not ended yet. We need to work together to protect ourselves and others. We should embrace the new normal lifestyle.”