WHAT DOES THE WORLD ECONOMIC FORUM (WEF) SAY ABOUT THE IMPACT OF COVID-19 ON THE ECONOMY?
On January 9, 2020, Chinese media reported that a team of researchers led by Xu Jianguo identified the pathogen behind a mysterious outbreak of pneumonia in Wuhan as a new type of coronavirus. . Although soon after, the virus was named 2019-nCoV (named by WHO in 12/02/2020), and was later renamed SARS-CoV-2 (named by International Committee on Taxonomy of Viruses), it is still commonly known as simply coronavirus.
The COVID-19 pandemic created an unprecedented shock to the global economy, making its potential impacts unpredictable.
The Economic Impact of COVID-19: Positives and Negatives
The global pandemic has disrupted business activities worldwide. But COVID-19’s economic impact has varied across regions, and the consequences have been largely dependent on a region’s economic position.
World Economic Forum (WEF) is a non-profit organization headquartered in Cologny , Geneva , Switzerland , where top business leaders, leaders of countries, scholars and reporters. Members discuss international current affairs, including the fields of health and the environment. In addition to annual international meetings and many other regional meetings, the World Economic Forum also publishes research findings and encourages its members to jointly implement initiatives that benefit the world.
Using survey data from the World Economic Forum’s 20th Global Competitiveness Report, this graphic showcases the economic impact of COVID-19 worldwide. This survey was conducted between February and July 2020 and includes responses from 11,866 business executives across 126 economies.
As you’ll see, the data was collected with the specific focus of contrasting the pandemic’s effects on developing economies compared to advanced economies.
Top Negative Impacts of COVID-19
By comparing business leaders’ responses in 2020 to their answers over the last three years, some clear trends have emerged.
In advanced economies, the top negative economic impact of COVID-19 has been a decline in competition, followed by reduced collaboration between companies and a growing challenge in finding and hiring skilled workers: According to statistics, the coefficient of competition in network services and cooperation between companies decreased significantly in 2020, down nearly 3% ( compared to the 3-year average). Competition coefficients in retail service and professional services also decreased significantly.
What’s driving this reduced competition in advanced economies?
A factor that affects could be “the increased use of online platforms”. Ecommerce is heavily dominated by a select number of retailers. Because of this, bigger retailers like Amazon have seen massive boosts in their online sales, while many smaller brick-and-mortar businesses have been struggling.
As the COVID-19 shock has above all hit labour-intensive sectors, the initial impact on labour supply could be stronger compared with past financial crises. With the exception of transport, the sectors most affected by the COVID-19 containment measures such as retail trade, accommodation and food services, entertainment and recreation tend to be more labour- rather than capital-intensive. Pandemic-related labor market consequences, such as workforce cuts due to discouraged labor growth or more restrictive global migration flows to advanced economies. This can lead to a continual shrinking of the workforce, and more importantly, loss of labor force.
While negative impacts on advanced economies are centered around market concentration and talent gaps, developing countries have faced different problems this year, like increased crime and governance issues:
It’s important to note that in the 2018 and 2019 surveys, organized crime and business costs related to crime and violence were trending downward. Because of this, the World Economic Forum suggests that we consider this year’s increase in these areas as a temporary COVID-induced setback rather than a long-term issue.
Top Positive Impacts of COVID-19
Despite the struggles brought on by COVID-19, the pandemic has also triggered positive change. In fact, business leaders perceived more positive developments this year than negative ones.
In advanced economies, the top positive impacts were government responsiveness to change, followed by internal collaboration within companies
Government responsiveness has changed in a positive direction, increasing by 8.2% in 2020, compared with the 3-year average. Interestingly, internal collaboration improved while external collaboration got worse. This is likely because companies had to adapt to changing work environments, while also learning how to collaborate with one another through remote working.Available venture investment,Social safety net protection,Soundness of banks also increased relatively, ranging from 4% to 4.4%
Internal collaboration didn’t just improve in advanced economies. In fact, developing economies experienced several of the top positive impacts that advanced economies saw as well:
While perceptions on official responsiveness to change increased, public trust in politicians decreased slightly. This indicates that, while government responses to COVID-19 may have been received well in developing economies, overall feelings towards political leaders did not waiver.
did not waiver.
Through these negative and positive impacts will help the world economy change and thrive in 2021 and we all will successfully repel the pandemic?