Covid-19 pandemic has cost the world’s economy $3.8TRILLION

The coronavirus pandemic and measures to slow its spread cost the global economy $3.8 trillion (£3 trillion), and put 147 million people out of work, a new study shows.

In the first work to attempt to quantify the impact of the pandemic, researchers from the University of Sydney created a detailed model of the global economy.

The sector to be hit the hardest is the travel industry – due to cancelled flights and countries closing their borders to visitors – particularly in Asia, Europe and the US. 

In fact this loss of global connectivity ‘triggered an economic contagion’, causing major disruptions to trade, tourism, energy and finance sectors, the team said.

The global losses already felt are likely to increase as lockdown measures continue, but lifting them too soon could ‘lead to even more severe and prolonged economic impacts’, the researchers said. 

In the first work to attempt to quantify the impact of the pandemic, researchers from the University of Sydney created a detailed model of the global economy

The UK economy is facing the worst recession in 300 years, since the Great Frost laid waste to Europe on 1709, in the wake of the COVID-19 pandemic

The UK economy is facing the worst recession in 300 years, since the Great Frost laid waste to Europe on 1709, in the wake of the COVID-19 pandemic 

The employment-population ratio in the U.S had been steadily growing since 2010, as pictured above, before a sharp drop in April 2020 cased by coronavirus shutdowns. It remained at 52.8 percent in May meaning that 47.2 percent of all American adults are jobless

The employment-population ratio in the U.S had been steadily growing since 2010, as pictured above, before a sharp drop in April 2020 cased by coronavirus shutdowns. It remained at 52.8 percent in May meaning that 47.2 percent of all American adults are jobless

The OECD warned recently that the UK is likely to be one of the worst hit major economies from coronavirus this year

The OECD warned recently that the UK is likely to be one of the worst hit major economies from coronavirus this year

The one positive side to the pandemic has been felt in environmental changes, with the ‘largest drop in greenhouse gas emissions in all of human history’. 

The ’employment shocks’ are being felt around the world, with up to 60,000 workers facing redundancy in the UK – many in retail jobs including for Boots and John Lewis.

This news came less than 24 hours after Chancellor Rishi Sunak delivered a £30billion package designed to keep people off the dole queue.

However, this is a global economic crisis due in a large part because of our globally interconnected economy, the researchers explained.

Global consumption saw the biggest single impact – dropping by 4.2 per cent – or about $3.8 trillion – equal to the gross domestic product of Germany.

More than 147 million people were made redundant around the world, resulting in a cut in wage income from salaries of $2.1 trillion – or six per cent of all wage income. 

Out of this total income loss, $536 billion or about 21 per cent was lost because of a reduction in international trade, the study authors discovered.  

Researchers studied the different global trade patterns and said the interconnected nature of the global economy was to blame for the devastating economic impact of lockdown

Researchers studied the different global trade patterns and said the interconnected nature of the global economy was to blame for the devastating economic impact of lockdown

These ‘significant labour market shocks’ are poised to grow as the pandemic persists, according to the study authors.

‘Moreover, subsequent economic shocks are likely to impact even further the quantity and quality of jobs, as well as affect vulnerable groups, such as migrant and unskilled workers who may not adapt to virtual-work arrangements,’ they wrote.

It is also likely to widen the global wealth and income gaps that already exist and potentially decimate healthcare systems in lower income countries. 

In April, World Health Organization Director General, Dr Tedros Adhanom Ghebreyesus, said this coronavirus was much more than just a health crisis.

‘We are all aware of the profound social and economic consequences of the pandemic,’ he said at the time.

The economic consequences outlined in the new study are the result of counter-measures such as lockdowns and global drops in consumption and production.

These measures are then amplified by cascading impacts as a result of globalisation – through international supply chains reliant on open borders. 

The 'employment shocks' are being felt around the world, with up to 60,000 workers facing redundancy in the UK - many in retail jobs including for Boots and John Lewis

The ’employment shocks’ are being felt around the world, with up to 60,000 workers facing redundancy in the UK – many in retail jobs including for Boots and John Lewis

‘The core principles underlying the mitigation and suppression strategies adopted to control the pandemic – distancing of individuals and quarantining of communities – work directly against the strengths of the global economy,’ the authors wrote.

‘Ironically the loss of connectivity imposed to prevent the spread of the COVID-19 has triggered an economic “contagion”’, they said. 

‘Governments are faced with the challenge of attempting to keep the global economy afloat by spending the International Monetary Funds’ war chest and other emergency funds, while trying to find new ways of working.’ 

The Australian scientists created a computer model that took a wide look at the global economy in order to capture any spill-over effects from one country to another in terms of losses.

They found that Europe, the US and China were the most directly impacted regions, and transport and tourism the immediately hit sectors.

However, the indirect effects are transmitted along international supply chains and are being felt across the entire world economy, the researchers explained.

‘These ripple effects highlight the intrinsic link between socio-economic and environmental dimensions, and emphasise the challenge of addressing unsustainable global patterns,’ the team said. 

‘How humanity reacts to this crisis will define the post-pandemic world.’

As bad as it has been for the economy, the team saw a dramatic impact on the environment with greenhouse gas emissions seeing the largest drop in human history – down by about 2.5 gigatonnes – or about 4.6 per cent of normal. 

Other atmospheric emissions such as the dangerous PM2.5 particulate matter dropped by about 3.8 per cent, and sulfur dioxide dropped by 2.9 per cent. 

Sulphur dioxide emissions mainly come from burning fossil fuels – which has been linked to asthma and chest tightness. 

Corresponding author Dr Arunima Malik, said this was the worst economic shock since the Great Depression – when the global economy shrunk by 15 per cent.       

‘At the same time we have experienced the greatest drop in greenhouse gas emissions since the burning of fossil fuels began,’ Dr Malik said.

‘In addition to the sudden drop in climate-change inducing GHGs, prevented deaths from air pollution are of major significance.’

Global consumption saw the biggest single impact - dropping by 4.2 per cent - or about $3.8 trillion - equal to the gross domestic product of Germany

Global consumption saw the biggest single impact – dropping by 4.2 per cent – or about $3.8 trillion – equal to the gross domestic product of Germany

She said the contrast between economic decline and environmental improvements show the dilemma facing the world when it comes to tackling climate change. 

‘Our study highlights the interconnected nature of international supply chains, with observable global spillover effects across a range of industry sectors, such as manufacturing, tourism and transport.’    

Coronavirus was first reported by the World Health OrganiZation on January 9 in the Chinese city of Wuhan and by the end of January there were 2,000 new cases a day.

By the end of February major outbreaks were being reported around the world and by April 3 many countries began to implement lockdown measures.

NEARLY 60,000 WORKERS FACE REDUNDANCY AS FIRMS ANNOUNCE LAYOFFS

Rishi Sunak suffered an immediate bloody nose in his battle to keep Britons in jobs today as it emerged nearly 60,000 workers face redundancy.

Less than 24 hours after the Chancellor delivered a desperate £30billion package designed to keep people off the dole queue, a series of businesses pulled the trigger on layoffs.

John Lewis confirmed that eight of its stores will not be reopening after closing for lockdown. 

The ailing department chain will permanently close major sites in Birmingham and Watford, as well as smaller outlets at Heathrow airport, St Pancras train station in London and four At Home shops in Croydon, Newbury, Swindon and Tamworth.

Rolls Royce and Burger King said job cuts were still on the cards, with Boots the latest to announce redundancies. The high street pharmacy more than 4,000 posts will be axed – seven per cent of its workforce – due to the ‘significant impact’ of Covid-19.

The move is a humiliating reality check after Mr Sunak raided the Treasury once again to prop up Uk plc.

His mini-Budget included a £1,000 ‘jobs retention bonus’ for business who bring workers back off furlough, and half-price meals out funded by the government. 

A grim-faced Chancellor conceded this morning that he could not protect all workers, and the UK was on track for a ‘severe’ recession. 

Researchers found that by that point close to 3 billion people had been asked to stay at home, more than 1 billion people isolating in India alone. 

These restrictions meant that people were unable to commute to their workplaces, and as a result, offices and factories closed. 

Internationally, broad entry bans were applied, and flight routes suspended. 

This affected businesses that were heavily dependent on trade, such as specialised manufacturing and health care supplies.  

For this study into COVID-19 and its economic and environmental impact, 38 regions in the world were analysed and 26 industry sectors, the team explained.  

Different countries and regions were impacted in different ways, for example OPEC nations lost income because they weren’t extracting as much oil due to reductions in global transportation use. 

Low-wage countries such as China and India stand out in terms of employment losses as people were buying less so production rates dropped. 

An assessment of total impacts of COVID-19 at a sector-level reveals that transport and tourism are the economically worst-hit sectors – not surprising given air travel basically stopped and people asked for refunds for booked flights. 

The International Air Transport Association (IATA) estimated that global revenues could fall more than 44 per cent below 2019 figures in the transport sector. 

Significantly affected by lockdowns are retail and wholesale, as well as service sectors, the researchers found.

This including business services in the supply chains of tourism, entertainment and personal services industries.   

University of Sydney Vice-Chancellor Dr Michael Spence said the work was possible because of a collaborative ‘foot printing’ platform funded a decade ago. 

‘It’s now possible to simulate the world economy quickly and accurately to see how society and the environment are impacted by changes in our consumption.

‘This research was conducted in the cloud-based Global MRIO Lab and it is these sorts of global, multidisciplinary collaborations that will help us tackle the complex issues of our time.’ 

The findings were published  in the international scientific journal PLOS ONE.