With Global Depression looming over us there are high chances that our global economy is going to suffer heavy blows which will eventually trickle down and affect your average wage earner.
With the spread of COVID-19 and it being declared as a pandemic by WHO, global supply chains have been blocked and the world is on a halt.
IMF has defined the global economy as growing less than 2% a year. The irony is in the fact that the methods used to control the pandemic are the very reasons why our global supply chain is on a halt.
Transport system has been completely shut down which means goods cannot be transported across countries by land, air or sea.
The airlines are suffering heavy losses which can amount to $113 billion in sales if the pandemic continues, according to the International Air Transport Association.
Because of the precautionary measures used, people are locked up in their homes and consumer spending has crashed. As a result businesses are at the risk of laying off workers or even shutting down. Unchecked business closures and layoffs will derail the economy and plunge into a destructive, global depression.
To ward off the evident danger, governments should ensure the survival of the business sector through Tax holidays, loans, suspension of interest payment or even paying a portion of the salaries for businesses to reduce layoffs. The governments should not only focus on small businesses but also on big businesses which are suppliers of small businesses in order to keep the economy afloat.
The stimulus packages being provided to citizens in various countries are only going to help for short period of time as number of job losses is rising rapidly. The US Department of Labor reported on March 26 that jobless claims that week were 3.3 million as compared to 282,000 the previous week.
In order to ward off the potential Global Depression, governments should focus on keeping their business sectors up and running and prevent the economy from going from a recession to depression.