The coronavirus has paralyzed the world economy.
The world Gross Domestic Product (GDP) suffered in 2020 his The steepest drop since the end of World War II, millions were left unemployed or their jobs suspended, and governments injected trillions of dollars into their economies to prevent further damage.
However, the recovery of 2021 is very uncertain. China’s economy is growing strongly again, but many of the world’s richest nations may not fully recover until 2022, considering an early estimate.
The inequality is also rampant. While the 651 American billionaires have increased their net worth by 30% to $ 4 trillion, 250 Millions of people in developing countries could face absolute poverty and up to half of the world’s workforce may have lost their means of subsistence. The speed at which the pandemic can be contained will have a great influence on the performance of the economy worldwide.
In the race between new strains of the virus and vaccinated them thus, an early victory is by no means assured.
Even wealthy countries that have purchased the most available vaccines may fail to inoculate enough people to create herd immunity to finals of 2021.
In developing countries, where vaccines are generally in short supply, it is expected that the virus spreads more.
It is likely that the big winners are countries like China and South Korea that succeeded in suppressing the covid – 19 early. China’s economy is projected to grow by 2021 8%, more than double that of the most successful Western countries even before the pandemic.
The economist argues that the Chinese economy, driven by its exports, has benefited from lockdowns in Western countries. The Chinese economy, driven by its exports, has benefited from the confinements in Western countries.
Western demand for services such as entertainment and travel may have decreased, but demand for household consumer goods and medical supplies has increased.
And Chinese exports to the US have reached record levels despite high tariffs imposed by the Trump administration.
China is also expanding its economic influence across Asia, with a new free trade zone in the Pacific and huge infrastructure projects along its trade routes to Europe and Africa.
Why the Chinese economy will “surpass” the United States in 2028 (five years ahead of schedule) It is investing in advanced technologies to reduce its dependence on Western supply chains, when it comes to components such as semic nductors.
China could now surpass the United States as the world’s largest economy in five years, twice faster than previously predicted.
Losers For rich countries such as the United States, the United Kingdom and those of continental Europe, the outlook is less optimistic.
After brief recoveries in the summer of 2020, their economies stagnated. This was driven by both the second wave of the pandemic and lockdowns.
In the US, for example, employment and growth closely followed the evolution of the pandemic, more than locks applied unevenly as business and consumer confidence plummeted.
After brief recoveries in the summer of 2020 , the economies of rich countries stagnated. Even with some recovery next year, these economies are expected to be 5% smaller in 2022 than if the crisis had not occurred.
However, are likely the biggest losers of 2021 are developing countries . They lack both the financial resources to acquire enough vaccines, and the public health systems to treat large numbers of infected patients.
They also cannot afford the huge government subsidies that have prevented unemployment massive in Europe and the United States.
And with the demand for their raw materials paralyzed by the recession in the West and the little aid available from rich countries to alleviate their large debts, they also cannot afford more confinements.
Which are the 3 Latin American countries whose economies will experience a greater “rebound effect” in 2021 Even fast-growing countries like Brazil, India, and South Africa face tough times.
For example, South Africa does not qualify for vaccines of the CO program VAX for very poor countries, but is not in a position to buy any vaccines on the commercial market, despite producing them locally for western pharmaceutical companies.
Previously those countries had a middle class growing; now many millions of working poor will be forced to return to their villages and urban slums due to lack of job opportunities, facing massive poverty and even hunger.
The new division The economic effects of the pandemics have been enormously varied in society.
Those who work full time, often in highly paid jobs that they can do from home, have accumulated substantial savings, as there are fewer possibilities for spend wages.
The very rich, especially in America, have benefited from huge stock market rallies driven by hits during the pandemic, such as Amazon, Netflix and Zoom , and this trend is likely to continue.
The very rich, especially in the United States, have benefited from the increases of Stock market driven by hits like Amazon, Netflix and Zoom. The big question for The economy is whether in the next year those with secure jobs and high incomes will revert to their previous spending patterns, or will keep their savings in the face of continued uncertainty.
On the contrary, many of those who have lost jobs or businesses or have been laid off, will have difficulties finding a new job or returning to their previous income levels, especially since low-wage sectors – such as retail and hospitality – are unlikely to fully recover after the pandemic.
This group includes many young people, women and ethnic minorities.
Inequality could increase as wealthy governments reduce the huge subsidies they have applied to keep many workers employed or with suspended contracts.
Rishi Sunak, the UK Chancellor, gave clear signals of this intention in his November spending review.
In the US, the political stalemate on extra aid spending was only resolved at the last minute, and Republicans will now likely try to minimize the administration’s spending Biden despite the enormous spending of the Trump years.
5 economic risks that Latin America will face in 2021 (and a chance) Europe has just reached an unprecedented agreement to provide European Union-funded aid to member states hardest hit by the pandemic, but tensions over the scope of the package are likely to continue and the recipients.
Many of those directly affected by the pandemic, who have lost jobs or businesses, will have difficulties finding a new job, says the expert . Cooperation could facilitate adaptation to a post-pandemic world. But international cooperation during the pandemic has been weak and economic tensions have further undermined the global commitment to free trade, not a good start for Brexit in Britain.
Nationally, the redistribution of wealth and income through higher taxes could give Western governments more resources to deal with the victims of the pandemic, but will be politically difficult in an ongoing recession.
Social unrest has been a consequence of previous pandemics. Hopefully this time, we find the wisdom to address the great inequalities revealed by the covid – 19 and build a more just world.
This article was published in The Conversation. Click here to read the original version.
Steve Schifferes is an Honorary Research Fellow, City Political Economy Research Center, University of London .
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