14 07 2020

The way out from quarantine, but not from the crisis. COVID-19

The way out from quarantine, but not from the crisis. COVID-19

We are witnessing a weakening of quarantine measures in almost all countries of the world. People are happy to return to the usual beauty salons, cinemas or parks visiting, return to the desired rhythm of their former life. However, as financial analysts predict, not everyone will be able to return to their former lives.

The crisis associated with COVID-19, called the most global in the last century, and the way out of it will not be easy. Recovery speed is far from expected. Experts already boldly assert that there will be a protracted rehabilitation, and something cannot be restored at all.

Despite the fact that the work of many companies is resuming, the level of wages, employment, business activity and production volumes simply cannot immediately return to the heights at which they were before the crisis. Why? There are at least 4 main reasons.

1. The first reason is that in some countries the first wave of COVID-19 have not yet coped, some countries expect a second wave of the disease.

2. The second reason is that both business and people are now very cautious about spending, due to the instability of the future. This factor simply undermines the foundation of the current economy - investment and consumption.

3. The third one is quarantine, against the backdrop of a large decline in business, cultural and social life, together with the trade collapse between countries, turned out to be a very costly way to get out of this situation. States invest huge sums to support the economy. All this leads to problems and a shortage of budget funds for economic development in the future, and the shortage, in turn, leads to an increase in external taxes.

4. The Fourth one is that not all countries will be able to recover quickly after such a hard shake. Even with government support, many companies are closing. As you know, the restaurant and tourism industries have suffered the most. Airlines suffer huge losses. People get cuts and finding a new job may not be an easy task.

Under the scenario that business activity will rise again by 2021, the global economy will not be able to recover all of its growth. Losses, according to the International Monetary Fund, will be 10 trillion. dollars. And, at a minimum, such an amount is planned to be allocated for confrontation with the current crisis situation.