Economic impact of the COVID-19 pandemic

This article needs to be updated. Please help update this article to reflect recent events or newly available information. (February 2022)

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The COVID-19 pandemic has had far-reaching economic consequences^[1] including the COVID-19 recession, the second largest global recession in recent history,^[2] decreased business in the services sector during the COVID-19 lockdowns,^[3] the 2020 stock market crash, which included the largest single-week stock market decline since the financial crisis of 2007–2008 and the impact of COVID-19 on financial markets,^{[4][5][6][7][8][9]} the 2021–2023 global supply chain crisis,^[10] the 2021–2023 inflation surge, shortages related to the COVID-19 pandemic including the 2020–present global chip shortage, panic buying,^{[11][12][13][14]} and price gouging.^[15] It led to governments providing an unprecedented amount of stimulus. The pandemic was also a factor in the 2021–2022 global energy crisis and 2022–2023 food crises.

Possible instability generated by an outbreak and associated behavioural changes could result in temporary food shortages, price spikes, and disruption to markets. Such price rises would be felt most by vulnerable populations who depend on markets for their food as well as those already depending on humanitarian assistance to maintain their livelihoods and food access. As observed in the 2007–2008 world food price crisis, the additional inflationary effect of protectionist policies through import tariffs and export bans could cause a significant increase in the number of people facing severe food insecurity worldwide.^[16]

Many fashion, sport, and technology events have been canceled or have changed to be online.^[17][18] While the monetary impact on the travel and trade industry is yet to be estimated, it is likely to be in the billions and increasing.

Amidst the recovery and containment, the world economic system is characterized as experiencing significant, broad uncertainty. Economic forecasts and consensus among macroeconomics experts show significant disagreement on the overall extent, long-term effects and projected recovery.^[19] Risk assessments and contingency plans therefore must be taken with a grain of salt, given that there is a wide divergence of opinion. A large general increase in prices was also attributed to the pandemic. In part, the record-high energy prices were driven by a global surge in demand as the world quit the economic recession caused by COVID-19, particularly due to strong energy demand in Asia.^[20][21]

The COVID-19 crisis affected worldwide economic activity, resulting in a 7% drop in global commercial commerce in 2020. While GVCs have persisted, several demand and supply mismatches caused by the pandemic have resurfaced throughout the recovery period in 2021 and 2022 and have been spread internationally through trade.^[22][23][24]

During the first wave of the COVID-19 pandemic, businesses lost 25% of their revenue and 11% of their workforce, with contact-intensive sectors and SMEs being particularly heavily impacted. However, considerable policy assistance helped to avert large-scale bankruptcies, with just 4% of enterprises declaring for insolvency or permanently shutting at the time of the COVID wave.^[22]