Impacts of COVID-19 on the Global Financial System
As we dive into this new month of September, let us delve into the impacts of COVID-19 on the global financial system. For many of us, it has been a pretty long 6 months of uncertainty. As the pandemic continues to play out, we cannot fail to point out how our lives and the economy at large have changed. Just like other countries in the world, Rwanda has faced its own share of economic downturns owing to the COVID-19 pandemic. The disruption has immensely struck businesses’ supply chains most especially industries such as Hospitality, Education, among others – leading to a major economic disruption.
According to a press release by World Bank in April, Rwanda’s gross domestic product (GDP) is projected to decelerate substantially in 2020 due to the negative impact of the COVID-19 (coronavirus) pandemic. This is inevitable following the shift of focus to strengthen the healthcare system first as well as Fiscal measures taken by the Central Bank of Rwanda to mitigate the situation such as easing Bank lending. Despite the provision of the stimulus packages, a reduction of economic activity in the country owing to lockdown has led to poor purchasing power and as a result, has slowed down the Rwandan economy.
Some of the common impacts we have witnessed so far are:
- Productivity is perceived to drop since some companies are unable to access government support.
- Downturn in the respective markets
- Reduced global economic output
On a global outlook, the grass is not looking any greener either. The US economy for instance is faced with deteriorating infrastructure, disruption of financial markets, induced market instability, wage stagnation, mass unemployment, mass eviction crisis and lock downs.
The coronavirus pandemic slapped the Spain economy quite an unprecedented blow.
It was one that they never saw coming since this financial crisis intensity can be described as no other, given the uncertainties. The Italian economy has sank owing to the economic costs of containing the pandemic – Lockdown. The cessation measures were just lifted recently in mid-June, longer when compared to other countries, meaning that the first half of the year saw a harsh reality - an economic deterioration owing to the strict restrictions.
Italy, being among the most affected countries with the COVID-19 outbreak, is facing a pang of devastating impacts to its economy. As a matter of fact, the Bank of Italy said it expects GDP to fall by 9.2%. As per the International Trade Administration (ITA), Italy's third-largest destinations for exports is the US. Now, as per a research by Globe Newswire, the SMEs in this trade contribute one third of value to the Italian economy and half of total employment in the country. Following the high death toll, the Italian government was forced to impose a nationwide lockdown and cessation of movement to mitigate the situation. As a result, most factories and businesses were temporarily shut down – therefore, leading to the inevitable; significant shrinking of the economy.
We have all experienced a certain level of hardship or challenges in one way either from a business and/or personal perspective, right from the time the pandemic hit home. Let us not lose hope. If anything, let us grab the available opportunities, experience and experiment and constantly keep looking into improving them.
We shall emerge from these devastating impacts stronger and wiser.
We are on your side!