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COVID-19, Featured, World Economy

Why the World Cannot Afford Another Lockdown in 2021

The resurgence of COVID-19 cases is a certain indication of the advent of the second wave. The second wave had been foreseen by the experts and is in tune with the previous epidemics. The intensity of the attack in the second wave is yet to be measured against the first, which has wreaked havoc, last year. 

Mutations and Spread

The latter part of 2020 was, however, better tackled with knowledge, experience, mass awareness, precaution as well as herd immunity.

While it appeared that all may be headed towards the recovery, the virus had begun to mutate. The huge doses of vaccines were administered to inoculate the masses in huge numbers. But fear looms overhead; the new virus strain may be able to evade the vaccine. 

This implies that the vaccines would have to be modified keeping in mind the current mutant structure and further possible variations if that part makes any sense to the virologists.

The more likely solution should come in the form of yet another lockdown, to cut down the spread of the more virulent strain that is currently active. 

Also Read: How Remote Working Saved the Economy Amid COVID-19 Pandemic

Impact of Lockdown

To stop the spread of the virus is of great importance for the people to contain themselves rather than socialize and catalyze the spread. However, there are other aspects that are crucial to life and livelihood, and hence must be considered. For example, In 2020, the GDP in the US contracted by 3.5% annualized rate making it the largest since 1946. 

There are five ways in which the lockdown impacts lives:

  • Unemployment: This probably is the only area that impacts our livelihood directly–the global lockdown has certainly accelerated job losses across countries. This shows up on their unemployment figures – ranging from a low of 3.8% in South Korea to a high of 5.9% in China for the month of May 2020. 

It is most unfortunate that this pandemic has caused job losses in several industries including the service industry, tourism, and hospitality. Moreover, the pandemic has actuated the reduced economic growth globally with its impact on both advanced and emerging economies.

  • Global services industry: Speaking of employment and job creation, the global services industry is a source of jobs around the globe – and particularly so in the U.S and China. Grappling the largest consumer base, the two major economies have largely contributed to global spending and retail sales – most of which have been severely impacted by the lockdown on the consumer and retail market. With most retail stores coerced into shutting down, the pandemic has caused a sharp decline in overall sales. While e-commerce-driven retail in companies like Amazon has been encouraging, it has failed to cover for the overall decline in sales for this industry.

  • Manufacturing industry: A fall in domestic and external demand has led the manufacturing output in most countries to slump in recent months. Talking about Chinese manufacturers, the U.S-China trade standoff in the recent couple of years had already impacted China-based factories and their overall output. Now, about manufacturing industries outside of China.  Largely, the pandemic has impacted factories relying on China for raw material to manufacture their own goods. Other manufacturing firms are “facing the pinch” simply due to the severe lockdown measures – as well as a major drop in the demand for their goods.

Read: Future of work: Enterprise agile practices will act as a catalyst, says HashCash MD, Raj Chowdhury

  • The demand for oil and natural gas: This is another global (and worrying) trend, brought about by lockdown. The global restriction on international travel has largely contributed to a fall in oil demand. With so many countries going into lockdown mode, forcing the vehicles to remain idle, the crude oil price has nosedived from around $55 for a barrel in February to less than $30 in May. Apart from oil, the global demand for natural gas has gone through a sharp decline in recent months. Last but not the least, let us talk about the impact of the lockdown on global trade.

  • Global trade: As per the World Trade Organization (WTO), the global volume of both exports and imports is due to plummet by at least 12.9% this year. In terms of global supply chains or logistics, the challenge faced by traders pertains to a severe restriction on the movement of goods – despite high availability. As trade is not considered an essential service, trading companies cannot employ labor – despite their availability – to drive their trucks or load goods into cargo ships. 

Also Read: How Did the Covid-19 Pandemic Trigger Surge in Business Start-ups

Conclusion:

Given the above impacts that have affected every major economy in approximation, the world would probably not go in for a full-on lockdown this year. The losses of the last year are too staggering to afford yet another. A slow or partial economic recovery in 2021 will not suffice to cover the damage caused in the last year. Economic experts estimate the overall loss to global GDP across 2020 and 2021 could feature in the range of over $9 trillion.

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