Recession, the COVID-19 pandemic brought the world to a halt in late March 2020. However, it was not the only pandemic most countries faced. With the lockdown in effect, business activities ceased.
With businesses seizing, a crippled economy will follow before heading into a recession. During this period, the fate of the world was uncertain. Will countries be able to make it out of this global recession? Is growth foreseeable?
The World Bank described the global recession in its June 2020 Global Economic Prospects, as the worst and deepest recession since the second world war. It also forecasted a 5.2% decline in the global economy.
The 2020 Goalkeepers Report from the Bill and Melinda Gates Foundation also claimed the loss during the Great Recession of 2008 is an understatement compared to the COVID-19 loss. The loss is said to be twice as great.
A lot of countries were and are still facing economic shock from the pandemic which you might say a whole lot actually.
The data released by Office for National Statistics (ONS) showed that the UK’s GDP dropped by 20.4% in the second quarter of 2020; being the country to have had the worst hit.
This hit is attributed to the reluctance to impose lockdown measures. Other big economies: the US, Canada, Japan, Italy, France, and Germany also faced low output due to the pandemic.
The second country with the worst hit was France, with a GDP contracting by 13.8%. On the contrary, Chile and Sweden were reported to have been at recession’s doors.
Surprisingly, only China saw a rise in GDP in the second quarter of 2020. The country expanded by 11.4% after being the first to reopen.
Although there was growth in the second quarter, China recorded its worst performance over three months in decades.
Note it is also not shocking that developing economies will see a recession. While developed countries will come out of it with signs of recuperation, developing countries with people hitting close to the international poverty line might bear the harsh brunt of the recession.
The Global Finance magazine indicates critical cases of a fall in external demand, health shocks, and struggling financial conditions, which these countries will face. Recovery will be very difficult stemming from the fact that they were struggling before the pandemic.
Additionally, an increase in global poverty has been foreseen by the World Bank in the last two decades which is not a surprise.
Thus, making over 29 million people plunge into poverty in South Asia, Sub-Saharan Africa, and other places in the world.
In the last quarter of 2020, Nigeria received non-surprising news that the country has plummeted into a recession. The National Bureau of Statistics recorded a contraction of 3.62%.
It is also the worst record in four decades; a contraction of 10.8% in 1987. This is attributable to the COVID-19 pandemic, land border closure, and the collapse in oil prices. It was vividly clear that a recession was looming.
Recovery is a long way for the Nigerian economy as the country has been recording an increase in COVID-19 cases.
Although the minister for information has informed the public of no incoming lockdown, it would take more than a ”no lockdown” to improve the economy. On the other hand, the country would not survive another lockdown, if implemented.
SP Global released a GDP growth report for the first and second quarters of 2020. 31 countries are in a recession. Two countries, Chile and Sweden, were on the brink of recession and only one country, China, witnessed a growth in the real GDP.
The 31 countries in a recession are the UK, Peru, the US, France, Canada, Germany, Mexico, Norway, Denmark, Portugal, Spain, Switzerland, Israel, Italy, Austria, Czech Republic, The Netherlands, Belgium, Turkey, Poland, Finland, Thailand, Malaysia, Singapore, Indonesia, Australia,
The Philippines, South Korea, Japan, Hong Kong, and Nigeria. The Cabal also released a list of countries in recession. The list included the countries above including India, Brazil, Russia, South Africa, Estonia, Hungary, Ireland, Latvia, Lithuania, and Romania.
The major recovery plan is vaccines. With the approval of the vaccines, there is hope for the global economy and countries in 2021 to leave the recession and record growth in the real GDP.
Though countries might not leave at the same time, it might take longer for developing countries due to their financial and health conditions together with other problems faced by each country.