Five years on, the economic impact of COVID-19 pandemic still lingers
(Source – The Hindu, International Edition – Page No. – 13)
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Topic: GS3 – Indian Economy |
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Context |
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Impact on Debt and Inflation
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Governments borrowed money to support welfare and livelihoods, increasing global debt by 12 percentage points since 2020.
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Emerging markets saw even steeper increases in debt levels.
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Inflation surged, peaking in many countries in 2022, driven by post-lockdown spending, government stimulus, and supply shortages.
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Central banks raised interest rates to control inflation, but responses varied by country.
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Sovereign credit ratings declined due to economic shutdowns and rising debt, with global credit scores still lower than pre-pandemic levels.
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Emerging market nations suffered even greater declines in their credit ratings.
Labour Market and Travel Changes
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The pandemic caused millions of job losses, especially affecting women and low-income workers.
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Employment recovered but shifted towards the hospitality and logistics sectors due to growing retail delivery demand.
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Women’s workforce participation dropped in 2020, as they were overrepresented in hard-hit sectors and took on more childcare responsibilities.
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Travel and leisure habits changed, with work-from-home reducing city commutes despite a return to pre-pandemic travel levels.
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The airline industry suffered $175 billion in losses in 2020 but rebounded, with 5.2 billion passengers expected in 2025.
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Hotel prices remain above 2019 levels, especially in Oceania, North America, Latin America, and Europe.
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Office vacancy rates have increased due to more remote work and flexible job arrangements.
Rise of the Digital Economy
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Online shopping surged during lockdowns and has remained stable post-pandemic.
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Retailers expanded both online and offline shopping spaces, with physical selling space in Europe increasing by nearly 1% from 2022 to 2023.
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Digital and delivery firms saw major growth during the pandemic, though some lost appeal over time.
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Retail investors contributed to 27% of stock trading in December 2020, with online trading platforms becoming popular.
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Practice Question: Discuss the long-term economic impact of the COVID-19 pandemic on global debt, inflation, labor markets, and digital transformation. (150 Words /10 marks) |
