The impact of the virus on the economy and the need to act quickly and collectively
With more than 827,000 confirmed cases in 205 countries and territories and with more than 40,000 deaths (https://www.who.int/emergencies/diseases/novel-coronavirus-2019), the World Health Organization reminds us of the risks to the global economy and the impact of the Covid-19 pandemic on economic and social activities.
The most recent analysis published (https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2313) by UNCTAD - the main UN body dealing with trade, investment and development issues - shows that the negative impact will be far worse than previously projected as recently as early March. New estimates of the economic impact of Covid-19 suggest downwards on investment flows of 30-40% for this and the next year. Previous estimates ranged from 5% to 15%.The trend of the top 100 multinationals tracked by the UN agency confirms the shock due to the fall in global demand, adding to the supply chain disruption after a production slowdown in some regions of China. The hardest-hit sectors are the energy and basic materials industries (-208% for energy, with the additional shock caused by the recent drop in oil prices), airlines (-116%) and the automotive industry (-47%).
A picture, which has also been confirmed in Italy in the latest Confindustria report (https://www.confindustria.it/home/centro-studi/temi-di-ricerca/congiuntura-e-previsioni/tutti/dettaglio/rapporto-previsione-economia-italiana-scenari-geoeconomici-primavera-2020): “An unforeseen shock hit the Italian economy in February 2020, when the virus began to spread throughout the country… a combined shock to supply and demand”, stated the report, according to which, “The gradual shutdown, temporary but prolonged, of many economic activities in the country, has been associated with a collapse in the demand for goods and services, both domestic and foreign”, with an estimated -6% drop in GDP in 2020, assuming that “the acute phase of the health emergency ends in May”. As for business investment, this is the most affected component of GDP (-10.6% in 2020), owing to “falling demand, rising uncertainty, a reduction in credit, and forced business closures”. A context that makes it “prohibitive for a company to implement new industrial projects, given that the continuation of current activities is compromised or at significant risk, as the decline in industrial production shows”.
For an update on the socio-economic impact of the pandemic, read the UNSDG working group report: Shared Responsibility, Global Solidarity: Responding to the socio-economic impacts of COVID-19