According to the IMF, the world economy was expected to grow by 3.3% in 2020, but it will actually shrink by 4.9%. They predict that if the countermeasures to the pandemic are successful, the world economy is expected to recover to achieve significant growth of 5.8% in 2021.
With that said, many countries have already started to open up. Although diminishing, COVID-19 is still with us, but it is just not possible to keep the economies hibernated for unknown periods of time. It is something even the strongest economies can’t sustain, let alone the countries that were already struggling to keep their heads above water before the pandemic hit.
Let’s see how soon complete economic recovery is possible and how different countries are working towards achieving it.
It all started in China. On 31st December 2019, China told the WHO about the outbreak of a pneumonia-like disease in many people in Wuhan. Back then, nobody knew what was causing the infection. On 12th January 2020, China publicly shared that the infections were being caused by a new virus, COVID-19, although controversy still looms over how long China waited before that made it public to the world and if things could have been different if that notified everyone earlier. However, we can’t change the past and so things began to escalate by March 11, 2020, WHO had declared COVID-19 as a global pandemic.
It took China three months to declare itself coronavirus-free. Although, after going 56 days with no new COVID-19 cases, a new case was reported on 11th June 2020.
China imposed strict lockdown and social distancing protocols in Wuhan in an attempt to contain the pandemic. During this time, the economy of China shrunk by 6.8% for the first time in 40 years. There was a noticeable decline in exports and the sales of consumer goods. However, China was soon on the road to economic recovery.
In March, the economy of China started to get better, as essential businesses were opened. In early April, China lifted the strict lockdown in the Wuhan city, which is considered the epicenter of the COVID-19 outbreak. It looks like China is working towards economic recovery slowly, but it remains to see what the world is going to do about this and if they will hold China responsible. Indeed, President Trump has already said that there will be consequences for China’s “mishandling” of the virus and the delay in which they let the world know.
The COVID-19 outbreak in Italy was worse than many other countries, including China. The death toll stands at the second-highest spot. Italy’s economy was already struggling with the after-effects of the oil crisis that hit the country in the 1980s. To try to control the COVID-19 outbreak from worsening any further, it imposed a strict lockdown.
On 4th May 2020, Italy lifted the longest-ever lockdown that any country of Europe had seen. Because let’s face it – no country can have their economies shut down forever. With the lifting of lockdown, the basic economic activity was restored, and it seemed like the normal routine was returning. Construction and manufacturing plants were opened, followed by the opening of restaurants, cafes, libraries and museums. Soon, restrictions on domestic travel was also lifted and the borders with EU countries were also re-opened. It took Italy two months to reach a point where they could consider restoring their economic activities. While a complete economic recovery may take years, they do appear to be on the road to complete recovery.
Australia has been one of the few countries that managed to contain the COVID-19 outbreak early on. It imposed a strict lockdown soon after the number of COVID-19 positive cases started to rise. Like many other countries, the economy of Australia was impacted badly. The sales of consumer products declined drastically, unemployment surged, flight operations were suspended, the real estate market froze and tourism seemed to have come to a halt. However, Australia has finally started its journey to the road of economic recovery.
The government plans to either cut down its spending or increase the taxes to cover up for the losses due to COVID-19. The country has no plans whatsoever to restore international flight operations for the rest of the year, but it hopes that it will boost domestic travel. As a result of increased domestic travel, the economy will experience a significant boost. The government is also planning reforms that will aid in speedy economic recovery.
According to experts, the GDP is expected to shrink by 10 to 15% by the mid of the year. As the workplaces and economic activities begin to come back to normal, the economic recovery will pick up the pace. Experts predict that the economy will get better during the second half of the year. It might take the country about 18 months to reach its economic highs again. However, it may not be until the end of 2021 that the Australian economy recovers from the impact of COVID-19 completely.
The world is praising how New Zealand managed to combat COVID-19 like champions! However, the battle against COVID-19 didn’t come easy for them. The country’s economy was struck quite hard and it seems like it will take quite a while for it to come back to where it was before COVID-19 hit. The worst the economy of New Zealand had ever shrunk was to 1.7%, but it is at 4.6% at present. The tax collection up to June remained below the target, which has left with less money to spend. Unemployment rates have surged from 4% to 8.3%. Worst of all, New Zealand is facing revenue deficits for the first time in many years. However, with the lifting of the lockdown and the restoration of economic activity, it may take at least 10 months for the country to achieve a complete economic recovery.
It looks like the world is learning to live with COVID-19. Countries all around the world are slowly opening up their economies. There is uncertainty surrounding complete economic recovery right now, but as they say – slow and steady wins the race. With smart strategies and gradual lifting of lockdowns, countries can successfully restore their normal routines and economic activities, without provoking the COVID-19 outbreak to get worse, which is a slippery slope but one that can be managed if done smartly and wisely.