In: Economics
Currently, COVID-19 has taken over what we consider to be our normal social and economic life. Compare and contrast how the European Union and the North American (Canadian and American) governments are handling the current crisis and how this could have a long- term global effect.
In the first six months of 2020, COVID-19 has affected almost all countries and eight million people around the world. COVID-19 has governments operating in a context of radical uncertainty, and faced with difficult trade-offs given the health, economic and social challenges it raises. More than half of the world’s population has experienced a lockdown with strong containment measures. Beyond the health and human tragedy of the coronavirus, it is now widely recognised that the pandemic triggered the most serious economic crisis in a century. The OECD predicts global economic activity to fall between 6% and 7.6% in 2020, depending on whether a second wave of infections hits before year-end or not.
Subnational governments – regions and municipalities – are responsible for critical aspects of containment measures, health care, social services, economic development and almost 60% of public investment, putting them at the frontline of crisis management. Because such responsibilities are shared among levels of government, coordinated effort is critical.
The regional and local impact of the COVID-19 crisis is highly heterogeneous, with a strong territorial dimension that has important consequences for crisis management and policy responses:
Health/social impact: some regions, particularly the more vulnerable ones, such as deprived urban areas, have seen higher caseloads and mortality rates than others. Vulnerable populations, too, have been more affected.
Economic Impact: regional economic exposure to the crisis is varying based on an area’s exposure to global value chains and specialisation in specific sectors like tourism, at least in the initial stages.
Fiscal impact: the crisis is resulting in increased expenditure and reduced revenue for subnational governments, and while its impact on subnational finance is not uniform, it is expected to be long-lasting.
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