Socioeconomic Impacts of Covid-19

Introduction

The Coronavirus (COVID-19) pandemic has led to more 290,000 deaths with over 4 million confirmed cases. The virus has also led to economic crisis in different countries and impacted on social sectors. Lockdowns, self-isolation, social distancing and travel restrictions have caused many people to lose their jobs and reduced workforce across different sectors (Buheji et al., 2020). While the demand for medical supplies have increased, schools have closed down. Undoubtfully, COVID 19 has shocked the world and severely affected the global economy. The recession caused by the pandemic is the fourth strongest in human history after the two world wars and the Great Depression. The effect of Coronavirus has slowed the growth rate, increased poverty, hindered trades, and worsening the debt crisis. Global trade has been affected negatively due to the closure of the borders. Moreover, the debt levels have unprecedently increased, leaving the world economy on the edge of another severe crisis. Debts have increased by 9 percentage points of the GDP in 2020, which is a historical rise since the 1980 developing countries debt crisis (Lenzen et al., 2020). The COVID-19 pandemic has not only led to economic crisis in the world but it has also led to social impacts and there is need for effective measures to be taken to reduce its impacts.

The Socio-Economic Impacts of COVID-19

Economic Impacts of COVID-19

Macro economy

COVID-19 has disrupted the global economy making it challenging for countries to come up with effective macroeconomic policy responses. According to statistics the economic activities contracted in the month of February 2020 in China which happens to be the primary source of this virus (Martin et al., 2020). At present China contribute roughly 27% of global GDP (PPP) and roughly 15% of global GDP (Nominal). It consumes 14% of global crude oil production. It consumes roughly 50% of basic metals produced globally. Chinese economy is a big economy in export and imports both ways. The COVID-19 pandemic has led to a negative impact on other economies and global economies as a whole. The European countries and USA have come under heavy attack of Covid-19 virus and lock down imposed by various governments is causing disruption in economic activities their also. The Global Economic Prospects report, provided by the World Bank in January 2021, expected the global growth rate to decline for 2021 and 2022. The growth rates are expected to be 4% and 3% for 2021 and 2022 respectively. These rates are lower than the long-lasting average global rate of 5% (Nicola et al., 2020). Moreover, millions of people in developing countries have fallen below the poverty line. Additionally, the income per capita has plummeted in more than 90% of the countries. In 2020, global trade shrunk by 9.5%, with a projection to grow back in 2021-22 by 5.1%.

Trade Losses

COVID-19 has also led to major trade losses leading to a significant impact on the economic sector. With economies everywhere in recession, people are buying less; hence cargos have been reduced. Lower oil prices due to the recession have allowed ships to run faster but with less cargo available they have slowed down. Nonetheless, charter rates have fallen for liquid and dry bulk cargos because of the worldwide economic slowdown. The global trade industry has witnessed lot of disruptions in the last eight months. In April 2020, the World Trade Organization estimated that global stock trade could drop between a staggering 13% and 32% in 2020 against the same period last year. The forecast was later revised to just 9.2% decline in October 2020, as trade growth in COVID-19 related products compensated for the decline in demand of other product categories (Martin et al., 2020). This, indeed, showed that trade is a global necessity. The crisis revealed that it is critical for businesses to embrace digitization, comply with dynamic tariff structures, and diversify their supply chains. Apart from diversification in the supply chain and having dynamic tariff structures, here are some ways global trade is changing.

There has been strong realization now of developing supply chain resiliency, automation and digitization of procurement processes. Also, as the pandemic continues to transform the world, world trade maps are being redrawn (Lenzen et al., 2020). Clearly, new manufacturing hubs could emerge as global supply chains are reshaped. The best time for seizing new business opportunities could be now. While many countries are increasing tariffs for import of goods, there are some who have opened boundaries for collaboration. Global trade and collaboration are necessary for growth of the economy of any country but COVID-19 has significantly impacted the process.

Food security

As the pandemic is affecting the vast majority of businesses around the world, and “social distancing” is a good measure to avoid further spread of the desease, many food manufacturing establishments are not working at full capacity. Thus, there could be a shortage. Also, transport has been significantly affected and if the food produced cannot reach the retail outlets then there will nothing on the shelves for consumers to purchase (Nicola et al., 2020). Nonetheless, the planting and harvesting processes have been hit by the pandemic and in food deserts where food supplies are already limited, prices have gone up because of unethical gouging practices. Also, when people rely on public transportation which may be limited during a pandemic – their ability to purchase food may also be limited. In countries that produce their own food, the supply chains are most likely under threat. Food chains from the farm to processing to the supermarket have broken down. In the U.S some processing plants have shut down due to infection. In counties that require food aid, transport links have broken down and the demand has increased.

Poverty

Poverty is also another major cause of negative economic impacts on people’s lives. The pandemic has prompted people to spend their savings beyond limit. Many countries around the world-imposed curfew, lockdown, or emergency to combat with COVID-19. The poor, daily wagers, marginalized workers and low-income people cannot afford to follow it. Coronavirus has put a halt on the economy in most of the parts of the world. This has direct impact on the poor people, who are either daily wagers or contract workers. The U.S Census has the poverty rate at 11.8%, or 39,000,000,000 in poverty, based on a bag of groceries from 1963 for three people. In reality, about 100,000,000 US citizens are in, at, or near poverty (Buheji et al., 2020). The newly unemployed are about 39,000,000. Various sources are estimating many possible outcomes if and when the current virus epidemic is declared over, but the consensus is that those in poverty, or near it, in the US could increase by 20–30,000,000, or about 40% of this country’s population. Globally, the impoverished population could increase by 500,000,000—half a billion people.

Social Impacts of COVID-19

Education

The sector of education has been hit significantly by the COVID-19 epidemic. Countries have made major decisions including shutdown, exams being postponed, and asking students to stay at home (Martin et al., 2020). The majority of the institutions however have closed and taken online lessons. Approximately 280 million students have affected due to this COVID-19. Private schools have hiked their tuition fees as some schools have started taking online classes which is no doubt the best possible step at this. COVID has created a situation of digital divide which means that students without any device or internet connectivity are not getting benefits. So, after this post COVID situation, there will be several students who will not be going to join schools. Due to COVID parents are not able to pay fees. Teachers have lost their job because low budget private schools (basically which are in rural areas) are not capable of paying their salaries (Nicola et al., 2020). COVID 19 is not even affecting students but parents and schools also. It is creating financial constraints.

Health

Public health is different from caring for the sick. It involves preparation, risk reduction, education, and other tactics that reduce the likelihood of events like this and the impact that events like this have on human lives, social systems, and the economy. COVID-19 has significantly led to many impacts in the healthcare sector (Buheji et al., 2020). Healthcare workers have minimized some contact with PTs and many non-emergency operations have been postponed. Also new patients are admitted strictly on a need’s basis in the hospitals as there is a have minimum ISO space. The cafeteria is now only for staff and patients.

Healthcare workers have been forced to work longer shifts and administration staff is substantially reduced. They have higher risk to contract the disease because they come in contact with infected people. In some places, they are overworked, and the physical stress leaves them most susceptible to infection (Lenzen et al., 2020). In others, they have run out of personal protective equipment and are improvising protection, and some or are attempting to reuse PPE with varying degree of success.

Employment

Half of the global workforce is on the edge due to COVID-19 Pandemic. The rapidly intensifying impacts of the Coronavirus outbreak on the world economy could be well perceived by now. Experts opine that the incipient economic crisis would have a far worse consequence than the 2008 financial crisis (Martin et al., 2020). This projects a critical global challenge outlasting the pandemic itself. No matter where people are or in which profession they are, the outbreak has given way to a chain of financial disasters that would affect the directly or indirectly. As of now, the four sectors that have experienced severe cutbacks and layoffs are retail and wholesale (482 million), manufacturing (463 million), food and housing (143 million), and business services and administration (157 million) – totaling to almost 1.6 billion cutbacks and unemployment. From the migrant workers to the ones working in the gig economy, all are in the immediate danger of losing their profession.

Structural Inequalities

In the wake of COVID-19, social inequality is becoming a significant issue that has dramatically impacted certain people. The pandemic is becoming a critical juncture to the worsening of inequalities as governments try to find practical approaches to solve the problem. Lenzen et al. (2020) address several human rights cases of abuse and social inequalities becoming significant concerns during the COVID-19 pandemic. In their article, Lenzen et al. (2020) talks about how different countries use Coronavirus as a pretext to silence reporting, criminalize freedoms and crush dissent. Among the significant social problems include vulnerabilities and inequalities, pre-existing divides, faultiness in human rights, and new fractures. Nonetheless, the researchers add that the pandemic has thrived since discrimination, poverty, human rights failures, and destruction of the natural environment have led to enormous fragilities in the world. Among the hardest-hit groups include women, people with disabilities, minorities, girls, and older people. For the longest time, extreme poverty has also risen, with the newest problem being the governments’ failure to practice equality in vaccines’ distribution. The writers call on everyone to respect human rights during this crisis to build more equitable and practical solutions.

Structural inequality majorly affects groups that have persistently attributed an unequal status or social disadvantage, including the minorities, the low-income earners, women, and the indigenous people. Contrary to the most advantaged groups in society, these groups significantly suffer from the impacts of structural inequality. Structural inequalities in the education and health sectors are the major causes of social divides during the contemporary pandemic. As Martin et al. (2020) that women and people of color are many frontline workers making them more exposed. Nonetheless, the low-income earners have to work as essential workers during the crisis to cater to their families. The minorities and low-income earners live in the densely populated household and communities, exposing them to the risk of contracting Coronavirus and high mortality rates. They also live in locations that can hardly be recognized or reached.

What can be done

An effective primary strategy that should be considered is traditional, but it misses from the contemporary discussions (Nicola et al., 2020). This type of response will help in leveraging a sizable surge of federal aid to the local and state governments that are currently conspicuously absent from the federal stimulus packages. Nonetheless, this strategy will be useful in countering the negative impacts of Coronavirus on the regional economies that have been hit the most.

There is need for awareness on following COVID-19 guidelines. Posters can be repurposed from the existing CDC materials.  Messages can be published on printouts that will be delivered to every person. This will help get the information to everyone, especially those that did not get the message well. Mainstream media is also critical for spreading the message (Martin et al., 2020). Existing television channels can be used to spread the measures in multiple languages. The programs or adverts should be used in languages commonly spoken in every country, including the deaf. Contents will always spread frequently to maintain and attract people’s attention. Social media is another important channel of communication that will encourage people to follow the procedures online. Routine postings can help in reinforcing health information and the importance of wearing masks. New messages will be developed, and CDC generated messages will also be used to ensure people understand COVID-19 protocols. Social media and mainstream media are appropriate channels since most people can access information through the internet, televisions, and radios.

Stimulating employment, supporting middle and small enterprises (MSMEs), protecting front line workers in the workplace, supporting Information technology sector – are the need of the hour. Also, decision-makers must pay heed to the developing trends and adopt innovative ways to sustain the economy (Buheji et al., 2020). Else, if the history repeats itself and the world will witness a period similar to the Great Depression, with massive unemployment prevailing, the human cost would be too much to bear. Also, there is need for effective ways to deal with the pandemic’s impacts in different sectors.

Conclusion

COVID-19 pandemic has led to significant socio-economic impacts in many countries. The loss of lives is way beyond our thought. Apart from human loss where the governments are trying to cure the patients and controlling the spread, they are also dealing with the continuous fall of the economy. It has severely affected the economy of many countries with the shutting of many factories. Most companies are starting losing revenues because of the lack of products to sell. Due to the restriction of movement global trade, the stock market and economies of the world have been affected. Due to the pandemic schools have been closed and exams have been postponed. Because of this all the children are experiencing loss in their careers. The healthcare systems have been overwhelmed with more demand for resources as healthcare workers complain of burn outs and being directly affected. COVID-19 has also increased the level of poverty and led to structural inequalities. There are many other sectors have been majorly affected including manufacturing, tourism and transport. As COVID-19 continues to impact the economic and social lives of individuals, there is need for effective methods that can help people deal with its impacts.

References

Buheji, M., da Costa Cunha, K., Beka, G., Mavric, B., De Souza, Y. L., da Costa Silva, S. S., … & Yein, T. C. (2020). The extent of covid-19 pandemic socio-economic impact on global poverty. a global integrative multidisciplinary review. American Journal of Economics, 10(4), 213-224.

Lenzen, M., Li, M., Malik, A., Pomponi, F., Sun, Y. Y., Wiedmann, T., … & Yousefzadeh, M. (2020). Global socio-economic losses and environmental gains from the Coronavirus pandemic. PLoS One, 15(7), e0235654.

Martin, A., Markhvida, M., Hallegatte, S., & Walsh, B. (2020). Socio-economic impacts of COVID-19 on household consumption and poverty. Economics of disasters and climate change, 4(3), 453-479.

Nicola, M., Alsafi, Z., Sohrabi, C., Kerwan, A., Al-Jabir, A., Iosifidis, C., … & Agha, R. (2020). The socio-economic implications of the coronavirus and COVID-19 pandemic: a review. International Journal of Surgery, 78, 185-193.