GTIPA Perspectives: Covid-19 on Public Health and the Economy of GTIPA Member Nations - 2020: The COVID-19 pandemic has inflicted the largest shock on the global economy since the Second World War, resulting in job losses for over 500 million individuals worldwide, reduced global trade flows, and a sharp decline in gross domestic product (GDP) growth. The effects have been severe, with the global economy at the end of 2020 projected to be 8 percent smaller than it would have been in the absence of the pandemic. According to the latest edition of the World Economic Outlook released by the International Monetary Fund (IMF) earlier this month, the global economy is expected to shrink in aggregate by 4 percent in 2020, rebounding to 5 percent growth in 2021. In dollar terms, this amounts to an estimated $3.7 trillion in wealth being destroyed in 2020. Advanced economies are projected to be hit harder than the global economy on average and recover more slowly, with GDP forecast to fall almost 6 percent this year, and only rise about 4 percent next year. By contrast, the developing world is projected to see a more than 3 percent drop in GDP this year, and a surge of more than 6 percent in 2021. This leaves the developed world to deal with the economic consequences of COVID-19 after many developing nations have surpassed their pre-COVID-19 GDP peaks, resulting in diverging growth paths between the developed and developing worlds. This is evidenced by the largest distribution of growth across 50 countries in 40 years during the second quarter of this year, and the estimate that America’s economy will be the same size next year as it was in 2019, while China’s will be 10 percent larger.
Global trade is projected to fall (and subsequently rise) disproportionately to GDP growth, both this year and in 2021. The World Trade Organization (WTO) forecasts that global trade will fall by around 9 percent in 2020, rebounding to a greater than 7 percent increase next year.14 However, the most recent trade forecast is significantly better than the 12.9 percent drop forecasted by the WTO in April. Trade in COVID-19-related products, such as personal protective equipment (PPE), and strong trade performance in June and July due to easing lockdowns have all improved the once-dismal outlook. This is in contrast to the 14.3 percent-collapse in global trade flows experienced in the second quarter of this year, highlighting the severe economic consequences of the lockdowns initiated around the world.
