The impact of the COVID-19 epidemic on the world economy
Research topic: The impact of the COVID-19 epidemic on the world economy
Name: Xuanyi Chen
Student number: 40281590
According to the World Health Organization (WHO), COVID-19 has spread to more than 150 countries or regions. As the epidemic changes, the global economic impact is being closely watched.
International Monetary Fund (IMF) Managing Director Kristina Georgieva said in a statement on March 23 that the COVID-19 outbreak will lead to a global recession in 2020 and a rebound in 2021. She said the human loss caused by the epidemic has become incalculable and the world should work together to cope with it. The COVID-19 outbreak has had a significant impact on the world economy, KPMG, the global professional services firm, said in a report to the Financial Times on March 23. On the one hand, the spread of COVID-19 is accelerating around the world, resulting in a sharp rise in uncertainty and a loss of investor confidence, thus triggering turmoil in the financial and capital markets. On the other hand, in order to control the spread of the epidemic, countries strictly restricted the movement of people and transportation, and pressed the "pause" button on the economy, bringing pressure on the economic operation from both the consumption and production sides.
In terms of the impact on capital markets, KPMG said that since the COVID-19 outbreak began in major countries around the world, panic has spread, global financial markets have seen significant volatility, and the us stock market has experienced four circuit breakers in just two weeks (to March 18), which will surely go down in financial history.
From the perspective of trade impact, international trade has made great progress since 2000. KPMG predicts that with the spread of COVID-19 around the world, countries will take measures such as traffic control and restriction of population movement, which will make the global economic and trade environment more severe and bring a certain impact to world trade.
From the perspective of the industrial chain, by 2018, the global export volume of intermediate products had reached 9.7 trillion US dollars, accounting for 52 percent of the global export volume of goods. China, the United States and Germany are the industrial chain centers in East Asia, North America and Western Europe respectively. South Korea, Japan, Hong Kong, Singapore and other countries and regions also rely on their industrial advantages and geographical location to become in-depth participants in the global industrial chain. KPMG pointed out that as the COVID-19 epidemic continues to escalate, strict control measures such as transportation and population movement adopted by various countries will not only affect the industrial production of each country, but also challenge the increasingly integrated global industrial chain.
In terms of transnational investment, according to the UN conference on trade and development (hereinafter referred to as the "agency") on March report, in the global top 100 multinational corporations, 41 companies issued a statement, said its profits may be because of the decline in sales or supply chain disruption and reduce, part of the company said it would slow down investment in areas affected by the epidemic. In the absence of a COVID-19 baseline, TDC forecasts global foreign direct investment (FDI) growth of around 5% by 2020. But as the epidemic spreads around the world, THE TRADE Development Council (TDC) predicts it will reduce global FDI by between 5% and 15%. KPMG believes that with the spread of the epidemic in the world, corporate revenues have been impacted and capital chains have faced increased challenges, making investor confidence vulnerable and having a certain impact on the development of transnational investment.
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