Question

Thought paper about the impact of the COVID 19 pandemic to the globalization and the contemporary wold

Answer 1

COVID-19 is  causing the most important and fastest decline in international flows in modern history. Current forecasts, while inevitably rough at this stage, call for a 13-32% decline in merchandise trade, a 30-40% reduction in foreign direct investment, and a 44-80% drop in international airline passengers in 2020. FDI tends to be volatile, so a double-digit decline is not as shocking as one might presume. FDI flows, for instance , fell 38% during the worldwide financial crisis. Nor do shrinking FDI flows necessarily augur a true retreat from corporate globalization. The foreign commercial activity of multinational firms doesn't always closely track FDI trends. every country had imposed restrictions on international travel, and 45% of countries had partially or completely closed their borders to foreign visitors. Airlines were flying 90% fewer seats on international flights, as compared to 62% on domestic flights.

As Covid-19 has already become a reason for closing the multiple businesses and closure of supermarkets which seems empty nowadays. Therefore, many economists have fear and predicted that the pandemic could lead to inflation. For instance, Bloomberg Economics warns that “full-year GDP growth could fall to zero during a worst-case pandemic scenario”. There are various sectors and economies that seem most vulnerable because of this pandemic, such as, both the demand and supply have been affected by the virus, as a result of depressed activity Foreign Direct Investment flows could fall between 5 to fifteen percent. Besides, the foremost affected sectors became vulnerable like tourism and travel-related industries, hotels, restaurants, sports events, consumer electronics, financial markets, transportation, and overload of health systems. Diane Swonk, Chief Economist at the Advisory Firm Grant Thornton, explained that “various nations have multinational companies that operate within the world because the economy is global. The pandemic is predicted to plunge most countries into recession in 2020, with per capita income contracting within the largest fraction of nations globally since 1870. Advanced economies are projected to shrink 7 percent. That weakness will spill over to the outlook for emerging market and developing economies, who are forecast to contract by 2.5 percent as they deal with their own domestic outbreaks of the virus.

Emerging market and developing economies are going to be buffeted by economic headwinds from multiple quarters: pressure on weak health care systems, loss of trade and tourism, dwindling remittances, subdued capital flows, and tight financial conditions amid mounting debt. Exporters of energy or industrial commodities are going to be particularly hard hit.