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Exploring The Global Economic Recovery After COVID-19
During the last few years, the global economy was hit quite hard by Covid-19. Several countries found it necessary to put restrictive measures in place to prevent the spreading of the disease that was constantly claiming part of the population.
Such restrictions were intended to safeguard individuals but brought a heavy casualty for companies needing personnel. Several countries initiated complete quarantines, bringing the economy to a standstill during this time.
However, companies began to face two situations: either they laid off their staff to cut costs or had to keep paying salaries to inactive staff. Consequently, many businesses went bankrupt, and production became increasingly scarce.
However, the vaccination processes were good news for the different nations that gradually began to see the economy recover.
Lifting of restrictions
With the lifting of restrictions, several companies could resume their regular production. However, this production was limited by the number of raw materials that could be found.
Most of the primary companies had also been affected so that the recovery process would be slowed down. On the other hand, the bankruptcy of many businesses would mean that demand could not be satisfied as before.
If the companies want to reach pre-pandemic production, patience and sustained production on a smaller scale are needed.
On the other hand, lifting restrictions also benefits certain tourism-dependent countries. The movement of travelers in nations such as Greece, Colombia, Mexico, and Spain reactivated businesses that had had to close.
However, some nations have decided not to open borders until very recently. Countries such as Japan kept their borders closed to travelers until just a few months ago, making collecting taxes from specific sectors difficult. In addition to diminishing their income from sources such as tourism, several businesses catering to this type of traveler are also greatly affected.
Opening other countries’ borders brought with it much greater ease of international trade. Many businesses’ outlook appears to have improved significantly, but this recovery may soon be eroded.
Possible recession and international conflicts
One of the shocks in the aftermath of the pandemic was the presence of a generalized increase in inflation. Mostly, this was due to the closure of multiple manufacturing companies and buyers’ large amounts of money.
Buyers began to purchase goods quickly; however, with insufficient production, demand was higher. This situation led to shortages of certain products, and prices for them began to rise.
To deal with inflation, the United States began to raise interest rates on loans. This measure eventually stabilized its economy, but it directly influenced the prices of products exported by the country to other nations: products became more expensive, and many currencies were devalued.
One of the most affected currency groups was cryptocurrencies, which with the increase in interest rates and the prohibitions imposed against them at the end of the pandemic, ended up falling below 50% of their value.
Additionally, there is the problem of the international conflicts that arose between Russia and Ukraine. This conflict generated many sanctions by the European Union while blocking access to a large market like Russia.
Finally, the impossibility of both countries exporting their products (grain, wheat, oil, and gas) has dramatically increased the price of these products globally. These rises in prices of basic needs again threaten to destabilize an economy that the effect of the pandemic has badly hit.
Is the world recovering from the pandemic?
The world is recovering slower after the effects of Covid-19, and nations are slowly returning to the economic state they were in before the pandemic.
However, although the situation is favorable regarding production and new jobs, the global economic scenario is exceptionally delicate. Rising inflation in several countries and constant falls in the stock market keep several governments on alert.
Many businesses are still dealing with the substantial capital losses they incurred during the pandemic years and are slowly but surely recovering. On the other hand, banks are taking the necessary measures to avoid significant economic problems.
However, given the recent conflicts and the delicate economic situation, it is impossible to claim victory. Signs of a recent recession have been seen, and several specialists say that if more similar situations arise, we could end up facing an economic depression.
Although there is no way to prevent it with 100% effectiveness if we find ourselves in an economic downturn, it is ideal to be prepared for it. For now, we can only hope that the world keeps on recovering without situations destabilizing it.