When looking at the future of the world economy in a post-COVID era, the outlook doesn’t seem particularly rosy. Now, this isn’t to say that the world will somehow generate into some kind of a dystopian wasteland. What this implies is that the recovery period that follows an economic crisis usually takes years to come full circle. Already some economists are calling for a “lost decade” in most parts of the world. While developed nations stand to recover much more easily, the outlook isn’t exactly rosy.
What does this mean?
It means that conventional theories are going to be seriously challenged. Any time events such as the COVID-19 pandemic come around, substantial changes are made to the world economy. And while some countries take longer than others to come around, eventually, all countries need to face these new challenges and realities.
Take the 2008 global crisis. This was a financial crisis that started in America and eventually spread throughout the world. It should be noted that the crisis itself began in America and affected American corporations. But it was the panic that wreaked havoc in markets around the world. This is why the 2008 crisis is called a “financial panic” as it was mostly psychological in Europe. Of course, the threat of economic collapse was quite evident across the world. Still, the world never really came to that point.
In the meantime, the world recession led to job loss and an economic slowdown. And just like this time around, the 2008 crisis greatly affected those who didn’t have a “rainy day” fund. Those who did not have any kind of emergency savings found it very difficult to bounce back following such a complicated period. Many lost their homes while others were forced to downsize their lifestyle.
As for those who were prepared, they came out much better from the crisis. They fared better as they were able to set some funds aside for a rainy day. So, when that rainy day eventually came around, they were ready for it.
This time, though, things are somewhat different. For instance, saving money is getting harder and harder as wages have increased quite slowly. Additionally, most people resort to debt as a means of bridging the gap. In most cases, people rack up credit card debt on top of consumer credits. Needless to say, this makes for a tight margin at the end of every month.
As such, it won’t be easy to come out of this new crisis. Hopefully, the pandemic itself will subside at some point. Nevertheless, it’s the recovery period that’s got everyone thinking about what they can expect. This is why there is a clear need to address the future today. Otherwise, who knows what the ultimate outcome might be.