Page 102 - GHES-3-3

Global Health Economics and
Sustainability
Pandemic effects on economy and public health management

3. Substantive effects of the COVID-19 projected at 11.4% and 10.6%, respectively. In addition, the
pandemic on the global economy government’s allocation of aid programs to health systems
and vulnerable economic sectors during the pandemic
The COVID-19 pandemic caused significant damage, increased public spending and the budget deficit grew
exceeding the adverse economic effects of the 2008 financial as a result, despite the potential countercyclical effects
crisis. The pandemic began as a health-related and social that automatic stabilizers can exert during crises on such
shock and transformed into a profound global economic deficits. Larger budget deficits cause public debt to rise and
downturn unprecedented for over a century (Lal et al., could introduce challenges in the long term, particularly
2020). Many businesses were shut down due to quarantine if current deficit levels are already excessive. The IMF
and self-isolation laws implemented by numerous nations assessments for 2020 (Donthu & Gustafsson, 2020)
to stop the spread of infection (Nicola et al., 2020). Thus, projected the eurozone’s gross public debt to equal 101.1%
employment and economic activities decreased globally of its GDP, the United Kingdom was expected to post a debt
(Fakhruddin et al., 2020). The International Monetary of 108.0% of its GDP, the debt of the United States would
Fund (IMF) projected negative global growth of −3.5% for approximate 131.2% of its GDP, and Japan was expected to
2020. Advanced economies were expected to experience a report the highest debt at 266.2% of its GDP. Nevertheless,
larger decline in real GDP (−4.9%) compared to emerging it must be noted that fiscal stimulus should not necessarily
markets and developing economies (−2.4%). Asia came be perceived as detrimental to the economy. Per Keynesian
to the brink of experiencing its first regional recession in theory, increased public expenditure triggers a rise in
almost six decades. The economies of the United States, aggregate demand and thus fosters economic growth.
the United Kingdom, and Japan were estimated to contract Globally, the economic downturn dealt a devastating blow
by 3.4%, 10.0%, and 5.1%, respectively. Congruently, the to the international labor market. A significant number
IMF predicted a significant 7.2% economic downturn in of individuals experienced unemployment or confronted
the eurozone. Spain was expected to experience the most decreased working hours. The implementation of rigorous
substantial decline in real GDP (−11.1%) in the region, quarantine regulations in numerous nations caused most
followed by Italy (−9.2%) and France (−9.0%). Latin enterprises to enforce an indefinite employment freeze,
America and the Caribbean were estimated to experience which resulted in the closure of many organizations. The
a projected −7.4% decline in GDP growth. Figure 1 depicts global employment losses incurred in the second quarter
the IMF projected real GDP growth rates in 2020 for of 2020 were projected to reach 495 million, an amount
30 selected economies that jointly represent around 83% significantly larger than the previous projection of 195
of global output. million offered in April for the same period (Al Achkar,

The World Economic Outlook (Zhang et al., 2020) 2022). Extreme poverty increased significantly due to
for 2020 stated that the world economy was experiencing the global economic downturn and job losses, affecting
historically unprecedented figures, with a contraction approximately 71 – 100 million individuals worldwide.
of −4.4% projected for that year. Forecasts indicated that the Low-skilled workers and people who were already living
economies of the United States and Europe would shrink in destitute conditions were particularly impacted, and a
approximately by 13 – 18%. The European Commission total of 684 million people worldwide became designated
estimated a recession of −7.8% in the eurozone. Spain as extremely impoverished (Sigala, 2020). It is more
was expected to exhibit the worst decline in its real GDP difficult for individuals with scant incomes to work
at −12.4%, followed by Italy at −9.9% and France at −9.4%. remotely during lockdowns; thus, their vulnerability to
The decline in Latin America and the Arab States was unemployment and exposure to COVID-19 increases.

Figure 1. Real GDP growth rates in 2020 for 30 chosen economies
Abbreviation: GDP: Gross domestic product.

Volume 3 Issue 3 (2025) 94 https://doi.org/10.36922/ghes.4531