New Delhi, December 21: The trade-war inflicted 2019 economy did enter 2020 hopeful to heal, with IMF predicting an annual growth of 3.3 percent in the beginning of the year. However, this short-lived aspiration soon turned into, what is now being referred to as the Worst Depression since the Great Depression of the 1930s. With a line-up of highly impactful events, including Brexit, RCEP formation, the US Presidential Election, and Germany taking up EU’s Presidency among others, the year was bound to take the volatile and vulnerable global economy on a roller coaster ride.

The global economy did go for a ride, a steep-down sided ride, but for a completely different reason - the COVID-19 outbreak and subsequent global lockdown. The pandemic has ridden the economy away from the path of growth and development, with the IMF projecting a yearly growth of - 4.4 percent in October. Though the situation seems to improve for certain individual economies, getting the global economy back on track will surely take some time.

With the imposition of global lockdown owing to the wide and uncontrollable spread of the novel coronavirus, various economic operations came to a standstill. Production hampered, supply chain disrupted, demand fell, income generation plunged and the world fell into a deep depression. Though the gradual reopening of the countries did show some positive signs, the economic operations largely remained crippled in 2020. According to a recent assessment from the United Nations Conference on Trade and Development, the world trade fell by 9 percent this year. Year Ender 2020: From Cyberpunk 2077 to Valorant, Here Are the Top 5 Best Games of This Year.

Capital generation also took a hit around the world. The investor sentiment being low, markets in the early quarters of the year did not see much investment. Not alone internal investment, the flows from rest of the world collapsed too. According to UNCTAD report, global foreign direct investment (FDI) flows have decreased by up to 40 per cent in 2020, from their 2019 value of $1.54 Trillion. This would bring FDI below $1 Trillion for the first time since 2005. The FDI is projected to decrease by a further 5 to 10 per cent in 2021. Any recovery in the FDI flows is expected only in 2022. Year Ender 2020: From Pranab Mukherjee to Ahmed Patel And Ram Vilas Paswan, Politicians That India Lost This Year.

The global lockdown has had a grave impact on the human resources worldwide. So far, 1,688,579 people have died due to COVID-19, as per official records. Apart from direct physical implications, the outbreak with serious economic repercussion has pushed back millions of people back into poverty and their standard of living worsening. It is projected to reverse the progress made since the 1990s in reducing global poverty and will increase inequality. Close to 90 million people could fall below the $1.90 a day income threshold of extreme deprivation this year owing to restraints on economic activities and physical movement.

Worst hit are the daily wage labourers, self-employed and others who work outside the formal and organised set-up. The pandemic has affected the labour market rates negatively According to ILO estimates, unemployment is set to rise by as many as 24.7 million people. Workers could lose between $860 billion and $3.4 trillion in labour income this year alone, which will likely prolong the negative effects of current lockdowns and make recovery from this crisis even harder. Experts fear that the spill-over effect of wage rate crisis in 2020 is likely to be felt at least 2-3 years more.

In 2020, the gap between the developed and developing economies worsened. The emerging economies were worse hit by the pandemic. They experienced increased pressure of weak health care systems, loss of trade and tourism, dwindling remittances, subdued capital flows, and tight financial conditions amid mounting debt. East Asia and the Pacific grew by a scant 0.5 per cent, South Asia contracted by 2.7 per cent, Sub-Saharan Africa contracted by 2.8 per cent, Middle East and North Africa by 4.2 per cent, Europe and Central Asia by 4.7 per cent, and Latin America by 7.2 per cent. As per IMF data, the advanced economies contracted by 5.8 per cent while the emerging markets were diminished by 3.3 per cent.

However, the second half of 2020 did show some hope of revival. With the successful clinical trials of various COVID-19 vaccine candidates, reopening of certain economies while ease on restrictions on others, the global economy has started its journey back to the top. However, it’s a long, uncertain one. Between July and September, most major economies expanded dramatically. The United States grew more than 7 percent compared with the previous quarter and Germany by more than 8 percent. The United Kingdom expanded by nearly 16 percent and France by a whopping 18 percent. Such performances were considered by experts as proof that economies would bounce back as soon as the virus was gone.

The Curious Case of China

Amid all the chaos and confusion around the COVID-19 outbreak, the great lockdown and a struggling global economy, China’s economic performance is worth a mention. While several economies are still not able to absorb the economic shock of the pandemic, China, from where the entire global disorder started, has managed to bounce back pretty quickly and strongly. The Chinese economy right now is all pumped up. China reported third-quarter GDP growth up 4.9 percent from a year ago, bringing growth for the first three quarters of the year to 0.7 percent year-on-year, according to data released on October 20 by the National Bureau of Statistics.

China has been able to revive its international trade as well. Country’s imports and exports have grown quickly in September, with imports increasing by 13.2 percent and exports rising 9.9 percent from a year earlier. Chinese exports increased to 21.1 per cent in November versus a year earlier, the fastest growth in nearly three years. PMI for November stood at 57.8 per cent China. The manufacturing index for the country in November at 54.9 was at a 10-year-high.

Hopes For 2021

As the virus-infected year comes to an end, manufacturing sector, which was laying low all through the year owing to the lockdown, is getting back on track, thereby, putting both money flow and real flow back in motion. The global manufacturing PMI increased to 53.7, a 33-month high and one of the highest levels in the past decade. It was driven by strong growth of output, new orders, and favourable market sentiment. Export orders increased, but only modestly. The countries that had strong manufacturing PMIs were the United States (56.7, a six-year high), Canada (55.8), Brazil (64.0), United Kingdom (55.6, a three-year high), Germany (57.8), India (56.3), China (54.9, a 10-year high), and Taiwan (56.9, a nine-year high).

2020 is finally coming to an end, COVID-19 vaccines have been authorised by various government, and the process of mass vaccination has been set into motion in several countries including the USA, UK, while it is close to starting in others. IMF, WTO, World Bank and other international bodies have infused a lot of money to help the downtrodden economies. People all over the world are looking at 2021 with home and faith, as IMF has predicted a global growth rate of 5.2 per cent for the next year. Experts believe that with adequate stimulus packages and vaccination programme, the global economy is likely to make a gradual come back in 2021.

(The above story first appeared on LatestLY on Dec 21, 2020 11:48 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).