What we can expect from the economy after Covid
In 2020, the global economy came to a halt with the advent of the Covid-19 pandemic.
Because of the restrictions many businesses have slowed down and some have been suspended. Also, some even closed down.
Now experts are looking to the future with more optimism. Economists around the world say a recovery is coming to the United States, it will subsequently arrive in Europe and then spread to the rest of the world.
Among the various effects of Covid there has been a decrease in investment. Savings have been put on hold because of uncertainty about the future. Now, however, people wish to catch up on this time.
Businesses have resumed usual activities and in some US businesses there is even a shortage of labor and some companies have had to raise wages.
The outlook is therefore brighter.
Also in Italy, according to ISTAT, the recovery will take place in the coming months and the labor market has shown positive signs already in the first part of 2021.
According to European Commission Vice-President Valdis Dombrovskis by the end of next year all member states’ economies will return to their pre-crisis level. According to the Wall Street Journal, the economic recovery in the U.S. will be facilitated by a lot of consumer savings, businesses looking to hire and a lot of support from politicians,
All of these factors make this recovery different and much more impactful than others in recent history.
In the U.S., new businesses are increasing at a very fast pace never before recorded. Home prices are up about 14% from pre-pandemic levels. When the lockdowns caused the global economy to collapse, economists and politicians were sure it would take years before a recovery.
Now, however, they are predicting a GDP recovery by the end of 2021 to return to pre-Covid levels and even exceed them.
Why all this?
The reason is that the current crisis was not a financial crisis but a natural crisis, as if produced by a natural disaster.
It is as if everything has been frozen, supply and demand have been on hold. Once the disaster has passed, the recovery is faster than a recession we are used to.
However, this rapid recovery could cause the problem of inflation as a backlash. There could be shortages of raw materials and labor, and this situation could continue for some time.
According to Oxford Economics, the world economy could grow by around 6% this year, since, thanks to vaccinations, some of the restrictions caused by the pandemic will be removed and therefore businesses will be able to restart. During the pandemic, people made many more purchases online, and global trade increased dramatically, surpassing pre-covid levels. Bank credit to businesses has increased.
But the situation is not the same everywhere.
Vaccination campaigns have come more slowly in Europe and in some cases retail sales in Europe have plummeted unlike in the US where they have increased. Many staff in the industries are laid off despite the fact that production has increased.
The USA will probably be the driving force behind this recovery and Europe and the rest of the world will follow over the next two years.
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Sources/more info at
https://www.agi.it/economia/news/2021-06-04/dopo-covid-piu-grande-rimbalzo-sempre-dicono-esperti-12791602/
https://www.cnbc.com/2021/03/10/a-year-after-the-pandemic-struck-the-us-economy-is-still-struggling-but-coming-around-quickly.html