RECESSION AND ECONOMIC EFFECT ON WORLD AFTER COVID-19

Global Economy could shrink by almost 1% in 2020 due to COVID-19 pandemic.

The analysis by the UN Department of Economic and Social Affairs (DESA) said the COVID-19 pandemic is disrupting global supply chains and international trade. With nearly 100 countries closing national borders during the past month, the movement of people and tourism flows have come to a screeching halt.

As per United Nations: The global economy could shrink by up to 1 per cent in 2020 due to the coronavirus pandemic, a reversal from the previous forecast of 2.5 per cent growth, the UN has said, warning that it may contract even further if restrictions on the economic activities are extended without adequate fiscal responses.

The analysis by the UN Department of Economic and Social Affairs (DESA) said the COVID-19 pandemic is disrupting global supply chains and international trade. With nearly 100 countries closing national borders during the past month, the movement of people and tourism flows have come to a screeching halt.

"Millions of workers in these countries are facing the bleak prospect of losing their jobs. Governments are considering and rolling out large stimulus packages to avert a sharp downturn of their economies which could potentially plunge the global economy into a deep recession. In the worst-case scenario, the world economy could contract by 0.9 per cent in 2020," the DESA said, adding that the world economy had contracted by 1.7 per cent during the global financial crisis in 2009.

It added that the contraction could be even higher if governments fail to provide income support and help boost consumer spending.

The analysis noted that before the outbreak of the COVID-19, world output was expected to expand at a modest pace of 2.5 per cent in 2020, as reported in the World Economic Situation and Prospects 2020.

Taking into account rapidly changing economic conditions, the UN DESA's World Economic Forecasting Model has estimated best and worst-case scenarios for global growth in 2020.

In the best-case scenario - with moderate declines in private consumption, investment and exports and offsetting increases in government spending in the G-7 countries and China - global growth would fall to 1.2 per cent in 2020.

"In the worst-case scenario, the global output would contract by 0.9 per cent - instead of growing by 2.5 per cent - in 2020," it said, adding that the scenario is based on demand-side shocks of different magnitudes to China, Japan, South Korea, the US and the EU, as well as an oil price decline of 50 per cent against our baseline of USD 61 per barrel.

The severity of the economic impact will largely depend on two factors - the duration of restrictions on the movement of people and economic activities in major economies; and the actual size and efficacy of fiscal responses to the crisis.

We can also see it by observing the graphs shown 

The global COVID-19 outbreak shows without a shadow of a doubt that governments have the ability to take urgent and radical action to contain crises. This will not be easy, and requires all of us to play our part. However, as we emerge from this immediate crisis, we need to be clear that responding to the short-term economic downturn with bad long-term investments would not make sense. Instead, we have an opportunity to use stimulus measures to boost growth following the COVID-19 health crisis to both curb air pollution and help address the climate crisis.

The growing urgency of the climate crisis shows the dire need for immediate measures to drastically cut emissions now. And the opportunities to do so, given new developments with clean technologies and their falling costs, have never been better. While the restrictions on travel and large meetings are challenging, in turn they may also help us shift our own behavior to work, education and travel patterns that are much more sustainable, including recognizing the opportunities and broader benefits of teleworking and virtual meetings. We are being forced to reset our habits now, but we should use this as a learning moment as we come out of the crisis.

We cannot punt the climate emergency down the road. This year, countries must deliver national climate commitments for 2030 aligned with reaching a net-zero emissions world by 2050.

While COVID-19 and its economic repercussions are rightfully the primary focus of many governments today, as we look to boost the economy, we also need to consider tomorrow.  For countries looking to shore up their economies in turbulent times and achieve long-term sustainable growth, climate action offers a compelling opportunity.