“The Effect of the pandemic on global economy”
Written by professor Amina Radwane
Researcher in legal sciences
“Economy” is defined as “The science which takes interest in any activities and/or operations that are in anyway connected to using the available resources in a particular society to create essential, valuable merchandise and distribute it throughout society’s members.
And so “Economy” stands for the best use of everything that is in society’s bag by going through multiple activities and operations, counting on the basic factors of the economy; presented as the land, the work, the capital and the project, and the activity could be described as economical if the whole of the later elements are present(1) .
And “Global Economy” is “the global exchange of merchandise and services which is expressed in “Cash Account Units” or simply MONEY (2) . and this economy includes all industries that export/import from/to various countries.
The world has known the spread of the Corona pandemic, whose signs appeared in late 2019 in the Chinese city of Wuhan, which started to expand and spread in various countries of the world, this led the governments of different countries to take strict and precautionary measures in fear of spreading infection between their members and the components of their society, from closing schools, preventing gatherings, and suspending court sessions, to declaring a state of health emergency by generalizing the ban, with all the consequences of prev curfew, transport, and closing land and air flights and more. If all of this expresses the desire of the states to preserve their members and guarantee theirphysical safety, then it has a negative impact on the global economy, given that these procedures and measures have been applied by various countries.
The global economy has entered a period of stagnation due to the outbreak of the Corona pandemic, and in this context the Organization for Economic Cooperation and Development expected the economy to decline this year to 1,5 percent, which is a rate that can be reduced if the pandemic continues (3) .
Thus, oil prices went down with the spread of the Corona pandemic, and this is due to the nature of the global financial market, which cannot bear fear and doubt and operates with the logic of “we sell now and ask questions later”,and the decline in the price of oil has shaken confidence in the global financial markets, In this, the US central bank stated that the current situation may lead to an economic crisis similar to the one that occurred in 2008 (4).
The aviation sector or the so-called air transport has not been spared the impact of the repercussions of this dangerous epidemic, and this was evident in the airline’s cancellation of its flights, which resulted in these companies ’behaviors towards their procedures evolving between work stoppage to being fired from work, or to provide unpaid voluntary leave or reducing the remuneration of its workers.
The world’s three largest airline alliances – OneWorld, SkyTeam, and Anisa Starr – have urged governments to evaluate all possible ways to help airlines.
IATA also warned that airlines around the world could lose $ 113 billion
as one of the consequences of the Corona virus outbreak(5).
The spread of the Corona pandemic had a bad impact on the tourism sector, and this came subsequently as a result of the health emergency declared by the World Health Organization stating that the Corona virus is a global pandemic, which led to the cancellation of all kinds of travel, whether air, marine or land, and also the closure of hotels And sights.
Note that a number of countries depend primarily on their domestic production and on tourism for their economy with more than 12 percent of annual global output.
Related to that, we have to note the damaged of the industrial sector by this pandemic, as a group of countries live on exporting their machinery and industrial products, which is not possible currently due to the closure of factories, companies and commercial institutions.
The investment sector has also been affected by this situation, especially foreign investment, which constitutes the pole of the global economy, this has triggered the collapse of the global stock markets as a result of the deteriorating economic conditions, and this all led to the global economic downturn.