Amidst unprecedented catastrophes of pandemic Covid-19, the global world from Asia to Europe, America to Africa garbling with the panacea of economic woes with looming threats of economic recessions. Based on the economic prowess, The vivid lines of first, second and third world states of past now blurred, with few exceptions, majority of the great economies of the world are undergoing through the grim consequences of one of the most non-traditional security challenge of pandemic Covid-19
In retrospect, the worldwide economy has faced various serious challenges in the 21st Century. Globalization has profited most of the world’s leading actors, yet the expanding interconnectedness of the global economy ensued grave apprehensions to the economic sector in various parts of the world. Some global issues are short term, for example, the ongoing downturn brought about by the credit crunch and related financial emergency. Majority of global economic shockwaves tend to be short term and might be self-correcting. Other short-run occasions can have enduring impacts, for example, the oil stuns of the 1970s, which for all time changed the worldwide oil market. Similarly, other global issues are long term and may require a strategic way to deal with discovering solutions. These issues incorporate worldwide imbalance and inconsistent economic turn of events, global poverty, the exhaustion of non-renewable assets, depletion of the climate and global warming, and foundational issues related to insufficient regulation of financial markets.
All challenges require urgent and unequivocal action, and each of the three can be converged together through concerted endeavours across the globe. It is significant, in any case, to comprehend the profundity and seriousness of the two long haul difficulties which are climate change and rising poverty, and their close connection, before we go to the more short term. Our reaction to environmental change and poverty decrease will define our generation. On the off chance that we fail on either of them, we will fizzle on the other. Unmanaged climate change will hopelessly harm possibilities for advancement in numerous parts of the world, and activity on the climatic change that frustrates development can never construct the global coalition on which such activities depend.
Additionally, in 2020, the most recent downgrade of the global economy came from a virus that and the entire world came under siege of a pandemic primarily known as the Coronavirus of COVID-19 which paused the entire world’s growth for a time being. The spread of COVID-19 across the globe has changed numerous individuals’ lives. As an ever-increasing number of individuals are approached to remain at home, numerous exercises have been compelled to move from offline to online (O2O), including work, shopping for food, deliveries, education, and diversion. As the wellbeing and human cost developed, the economic damage is now apparent and represents the biggest financial shock that the world has encountered in many years. The spread of the pandemic made every country impose lockdowns which lasted for months. The lockdowns resulted in degrading the market economy since the persisting virus outbreaks caused restrictions over movements including trade, import, and export.
There are five pattern shifts all around the world that by their nature of worldwide collaboration, yet have been thought little of, underestimated, and under-addressed both broadly and universally whose outcomes have shaken our reality with an unforeseeable power.
- Energy and Environmental Security: Energy and natural security is a rising primary issue for the global economic agenda. It has forged consensus on the potential for long-term financial, national security, and societal harm from uncertain energy supplies and ecological fiasco, as the extraordinary requirement for mechanical advances that can give low-polluting and secure fuel sources. However, despite developing global momentum, there is still little concurrence on the best set of actions needed to diminish global reliance on non-renewable energy sources and greenhouse gas outflows. Perplexing the international policy challenge is the disproportionate effect of high oil costs and a boost in global warming across countries, protecting a few nations from quick concern while compelling others to press for a rapid change.
- Growing Income Disparity: from centuries, nations have tried to compare themselves with other states of the world especially when it comes to wealth, which makes us less concerned about our absolute level of wealth since we tend to compare what we have and what we own in relative terms to the people around us. The global private wealth had increased to $166.5 trillion in the year 2016, which was driven by the rapid increase in faster economic growth and stock price performance mainly. The Global South is much poorer in contrast to the Global North, which is why inequality is getting ever worse. A tipping end was reached in 2015 when the richest 1% in the world owned as greatly as the rest of humanity. This style has continued and additionally accelerated. This has brought on a widening gap between the middle and the elite classes across the globe.
- Technology has taken over the trend of jobs: in terms of the replacement of job markets with technological advancements, a question arises; how disruptive will be the effect of globalization and technological advancements on labour markets? Throughout the last three decades, advanced economies have seen the labour incentive sector jobs move to develop business sectors. In different cases, innovations have made certain occupations old. UNCTAD (United Nations Conference on Trade and Development) delivered an approach brief in 2015 that said robots could remove 66% of occupations in developing nations. For instance, the world’s largest companies such as Apple, Google, China Mobile, and Bank of China had employed over 1.3 million people but in the contemporary world, all of the companies have now become advanced in technology with lesser labour by firing most of the skilled labour which has also increased their market capitalization by 30%. This is one of the major economic issues being faced in the contemporary world since the students of the world have been working hard to achieve technical skills to get a job but the job market is now shrinking because of employees being replaced by robots.
- The Rebellious Protectionism: G20 nations have become more protectionists. The total number of unfair protectionist measures implemented by G20 nations has expanded over the previous years. The primary driver has been the U.S. As indicated by the Global Trade Alert report, had the United States been avoided, the all outnumber of protectionist strategy instruments forced by the G20 would have been lower in 2017 than in 2016. The U.S. has implemented the most protectionist and trade-restrictive proportions of its peer group, for example, the European Union at least. This sounds strange for the nation that highly esteems an open economy, yet it appears to be that it is Europe that is advocating trade barriers limiting and the shirking of protectionist measures.
- Growing Migration: The ongoing refugee emergency in Syria and the subsequent arrival of more than 1,000,000 travellers in 2015-2016 in Germany introduced an imposing test to political and social stability. Notwithstanding harder checks and balances have kept an eye on the EU’s borders, and a disputable refugee agreement with Turkey, the EU is investing more in the migrants’ origin nations. The exiles from Syria have been escaping a ruthless civil war. They are getting away from brutality; the same numbers of migrants additionally are from Iraq and Afghanistan, and, in such cases, humanitarian causes ought to consistently beat different other contemplations. Wars, climate change, and more extensive economic and social disparities are the underlying factors of migrations. While these expansions in migration are generally straightforward, they in any case cause issues in the nations of arrival such as integration issues, absorption limits, and skills mismatches.
- The Challenge facing the Rise of Global Economy Growth after Covid-19: Businesses across the globe found it hard to service the debt while the heightened risk abhorrence could lead to an increase in the borrowing costs and bankruptcies and defaults could be resulted in the financial crisis for many countries. A report by World Bank has estimated that if the current scenario proceeds for longer, the global growth index could be shrunk by almost 8% in 2020. The June 2020 Global Economic Prospects looks past the close term outlook to what exactly might be waiting repercussions of the profound worldwide recession: mishaps to potential output. The degree of output an economy can accomplish at the full limit and full employment along with work profitability. Endeavours to contain COVID-19 in emerging and developing economies, incorporating low-pay economies with limited medical services, could accelerate further and longer economic recessions worsening a multi-decade pattern of easing back expected development and productivity growth. Many arising and developing economies were already encountering more fragile development before this emergency; the stun of COVID-19 presently makes the challenges these economies face much harder.
Nevertheless, the Multilateral institutions and International organizations have somewhat proven to be the most effective way through which, both, the developing and emerging countries can find suctions to solve the complex global economic problems peacefully and constructively.
For a better future, the countries should strategize on enabling firms to make industry decisions and technology choices based on the economy’s comparative advantage which will later allow the states to perform better than the alternative approach which is the comparative advantage defying strategy. The comparative advantage following (CAF) strategy will be more effective in allowing the countries to catch up and reduce the growing poverty along with inequality within their nations.
To grow, the developing countries shall shift to sustainable development. First, it requires a stronger focus on flow variables, (for example, the debt servicing cost-to-export income proportion) as opposed to stock factors, (for example, the obligation to-GDP proportion) in evaluating the obligation circumstance of a nation. Second, policymakers should make considerable investments in the developed organizations that intend to encourage reasonable and better incorporation of their nations into regional and worldwide value chains. This could improve domestic worth-added and access to technologies and assets, and also enhance economic activities, consequently assisting with expanding effects of SDG investments and limiting related risks. Third, there should be a reexamining of the role of private areas in the society, which should go past private financing and include support for the way toward diminishing any risks encompassing SDG financing and investment. To conclude with, the global world must work collectively to mitigate the growing economic challenges