- The Covid-19 pandemic has grown with shocking speed across the globe, creating one of the biggest financial jolts the world has gone through in years.
- The standard forecast done by June 2020 Global Economic Prospects foresees a 5.2% reduction in overall global GDP in 2020.
- Representatives from China declared recently that the country’s financial system got strengthened by 4.9% in the third quarter.
- The calamity of corona has thrown the US economy into a very deep hole, though the financial system is expected to bounce back fervently during the third quarter, the outlook is unusually uncertain.
The Covid-19 pandemic has proliferated with startling pace worldwide. Affecting millions and dragging the global economy to almost a cessation, the pandemic had all the countries imposing strict controls on several movements, to stop the spread of the virus.
As the pandemic’s toll on the mankind rises, the economic destruction can be seen clearly. The damage signifies the biggest financial jolt the world has gone through in years.
The standard forecast done by June 2020 Global Economic Prospects foresees a 5.2% reduction in overall global GDP in 2020. In the long run, the deep depressions sparked by the series of lockdowns are anticipated to leave behind lasting scars, thanks to the poor levels of investment, loss of human capital because of abandoned work and fragmentation of global trade and supply linkages.
China, the first country to grow its economy post Covid-19
While the pandemic is expected to push most of the countries into recession in 2020, official representatives from China declared recently that the country’s financial system strengthened by 4.9% in the third quarter, a positive sign from a country which was the Covid-19 epicentre initially. The most important element behind this rebound being the strictest ever containment measures that would be tough to copy or implement in a democracy.
However, the growth number is lower than 5.2%, as expected by economists. GDP was able to climb 4.9% in the third quarter, lower than what the economists had forecasted, but quicker than the 3.2% development seen in the second quarter. Retail sales increased by 3.3% in September, and industrial production soared by 6.9% along with the 0.8% progression in investment growth.
The almost 5% progress is a far cry from the collapse the China market underwent at the beginning of 2020 when the pandemic first appeared. During the first three months of this year when the country was witnessing lockdown, the economy in China fell by 6.8%.
It was the first time since 1992 that the country’s economy shrank.
Still, China spearheads the responsibility for a global revival based on its recent GDP records, suggesting that it is on a recovery mode. The trade figures for September show exports growing by 9.9% and imports heading up by 13.2% as compared to September 2019.
In the past twenty years, China’s economic growth has been rising by 9%, although the pace has slowed down. As for 2020, along with the Covid-19 pandemic tensions, the trade war with the US is also responsible for harming the economy.
Despite the lower-than-likely expected GDP show, output increased 0.7% in the year to date. This suggests that the world’s second biggest economy recovered all the ground it lost in the first half of the year.
But the recovery has come along with comparatively restricted government borrowing and central bank relieving as compared to other countries.
If socio-economists are to be believed, China’s victory in preventing small clusters of Covid-19 from an outburst in a controlled manner, was the key to the economic revival. The revival would not have been possible if China had witnessed a second wave of the virus, which most of the countries suffered from.
Quick and convincing government actions brought all the difference. Assertive lockdowns and careful reopening protocols involving compulsory contact tracking and implementation of quarantine orders prevented the community spread.
US economic recovery to take time
The economy of the US is largely propelled by consumer spending. When consumers spend, companies make a profit, and the economy fares well. As per the records, currently there are 6.8 million more unemployed people than there were in the month of February. The employment rate in the US has fallen substantially from 14.7% to 7.9%.
America has around 4.25% of the total population of the world, but it recorded more than 20% of total Covid-19 deaths. The corona cases have surpassed the 40 million mark globally. On an average, more than 50,000 cases are registered in a day only in the US.
Although, the financial system of the US is recovering post this big ‘pandemic’ hit, “it might take another year before the economy resumes to the pre-crisis levels,” said Federal Reserve’s Richard Clarida on 19 October.
Clarida said that the calamity of corona had thrown the US economy into a very deep hole. While the financial system is expected to bounce back fervently during the third quarter, the outlook is unusually uncertain.
Also, the uncertainty hovers around the economy as the US Presidential elections are on the way, and while the Covid-19 disaster has shaken the US economy, the role of government is again at the forefront.
Clarida also said the Federal Reserve had made some crucial modifications in banking management to maintain the credit flow to domestic units and private firms. The central bank is also making efforts to modernise the existing Community Reinvestment Act.
Penny stocks have been known to attract investors who are looking for explosive gains and it is possible to get lucky with these typically speculative investments. Just as the name suggests, penny stocks trade at low prices and are common shares of small public companies.
Get an exclusive insight into the features of penny stocks along with their pros and cons. Read about what you should be wary about when figuring out ways to invest in them, so that the possibility for big rewards does not tend to outweigh the risks.