Will Covid-19 inevitably lead to a worldwide economic depression?

“Perhaps for the last time in their lives, people went out on the street without a mask. No one expected a virus to come and change the world order.”

?????????The coronavirus which started to spread in Wuhan, China in the last quarter of 2019, was ignored by most people in its early stages. The opinions of many academics and experts in the field of diseases were that the spread of the virus would end in a short time. The Chinese government has placed various restrictions across the country on pressure from various states around the world. With the curfews, Chinese security forces used to force people to quarantine their homes. These restrictions have started to work to reduce the rate of spread and reduce the rate of transmission in China. Most people thought that the virus could not cause a pandemic, but would pass as a disease that started and ended in China. One thing that was overlooked was that some people living in China went to different countries due to restrictions. According to Bag (2020), a journalist from Euro news, fear happened, and the virus was first seen in Thailand, outside of China, on January 13. The regional epidemic was now a pandemic. Later, the virus was found in Japan and South Korea, respectively. The first virus in the USA was in Seattle on January 21, and in Europe, the virus was first seen in France on January 25. The virus which is spread to various countries of the world in a short time started to change some things in the countries where it was seen. The coronavirus started to be seen in most countries of the world in March, preventing people from easily going out. Restrictions, curfews, and travel bans brought many questions to people's minds during this period. What would happen to those who were unemployed due to the pandemic, how would economic growth be affected by the pandemic, or the most important question was the world on the brink of a new economic crisis? The coronavirus measures taken by the states have negatively affected most sectors. In addition to the curfew restrictions, measures such as the opening of the enterprises between certain hours and the closing of places where people can be crowded have deeply affected the sector employees. Since SMEs were not customers, they started to close their businesses. Big factories, on the other hand, wanted to continue their business by changing their operations. For example, famous clothing companies like LC Waikiki started to produce masks or cosmetic brands focused on the production of needed products such as disinfectants and cologne. On the other hand, the gross domestic product (GDP) rates of the countries decreased significantly compared to the previous years. It has become a situation accepted by everyone that there is an economic crisis in the world. So how are the countries of the world affected by this crisis, what should they do and how will they overcome this crisis with the least damage? If the pandemic continues to show its effect in this way as lethal and spreading, a global economic depression awaits the world in the future.

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?????????The number of Covid-19 cases and the occurrence of this virus almost everywhere globally is one of the most important factors in determining the economic situation. The coronavirus, which we encounter in a wide geography from the USA to China, has started to change the economic balance. In the autumn, due to the second wave of Covid-19, the number of cases increased and restrictions increased. Increasing restrictions have significantly reduced the flow of consumer money within the market. Harari (2020) claims that If comparing the second quarters of 2019 and 2020, the GDP values of the countries have decreased by approximately 2% to 13%. One of the main reasons for this change is the uncertainty among consumers. After the pandemic started, people hesitated to spend money due to reasons such as fear of being unemployed and uncertainty in the markets. According to Gopinath (2020), assuming that the pandemic subsides in the second quarter of 2020 and that policy steps taken around the world are successful in avoiding widespread corporate bankruptcies, long job losses, and system-wide financial problems, global growth is expected to rise to 5.8% by 2021. The recovery seen in 2021 is only partial, it is expected to remain below the level foreseen for 2021 because the economic activity forecast was made compared to the pre-Covid-19. In 2020 and 2021, the economic loss of the pandemic crisis to total GDP maybe around $9 trillion, it's more than the combined economies of Japan and Germany. Meyer (2020) argues that there is a natural decline in real space shopping as people accept social distance as a way of slowing the spread of the epidemic. In one study, the number of online shoppers increased by 25 percent for men and 39 percent for women. After the measures taken by the governments to reduce the pandemic spread, the trends of the consumers have also changed. In particular, the online shopping trend has risen rapidly, and the production and service sector has suffered greatly. People gave their priorities to basic foods and hygiene products, paid attention to luxury consumption products, and did not spend unnecessary expenses. Consumers took care to keep cash in their hands and started to use loans or credit cards in shopping. This caused cash flow to slow globally. According to Elegant (2020), one of the countries most affected by the Covid-19 period in China. As China is on its way to becoming a superpower in the world, the emergence of the coronavirus from China has significantly reduced the consumer demand for Chinese products. Compared to last year, its economic growth has decreased by 3.5%.

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???????????Quarantine decisions, closing borders, curfews, and taking delivery of places caused people working in the sector to be unemployed. Economists have various opinions about the world economy after the coronavirus pandemic. According to Burrow (2020), who is the general secretary of the International Trade Union Confederation, he claims full employment and a new social system should be our aim for recovery. The backbone of stimulus that decreases inequality can be public spending in the healthcare economy, education, and low-carbon infrastructure. Wage reform, collective bargaining, and control of the labor market will revive demand and sales while putting an end to a business model that encourages corporations to take little responsibility for their employees. Unionization and collective agreements will gain importance and there will be improvements in salaries. Bremmer (2020) who is president and founder of Eurasia Group, argues that deglobalization is the first pattern; the logistical challenges brought to light by the current crisis are already pointing to a move away from the global supply chains of just-in-time. However, the eventual rise of nationalism and "my nation first" ideology will force businesses to localize business processes that favor regional and national supply chains as economic troubles increase. Roubini (2020) emphasizes that the economy will follow an L-shaped economic chart in the post-pandemic period, as in the period of the Great Depression, but it may also be U-shaped according to some economists. The meaning of a U-shaped graph indicates that the economy will bottom out first, continue that way for a while, and then increase. He points out that this increase will not be rapid and may take a long time. An L-shaped economic picture shows that the economy will crash and remain in that process for many years. He sees the reason for this as the firing of people working in developed and developing countries. According to European Commission (EC) (2020), losses for European companies (listed and non-listed) arising from lower revenues are expected to range between EUR 720 billion and EUR 1.2 trillion in 2020 alone. The forecasts show that, after exhausting working capital and cash reserves, around 25 percent and 35 percent of firms will face a funding deficit by the end of the year. Wholesale and retail trade, lodging and food services, and transport industries are the sectors that display the largest share of companies facing liquidity and working capital shortfalls. Firms working in this sector can continue against a real bankruptcy or concordat.

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???????????Countries, corporations, and people will face a major economic depression in the world in the near future. According to García-Herrero (2021), An economic recession is expected worldwide after the pandemic. There are various reasons for this economic recession. The global unemployment problem will change the distribution of income among people. While the number of middle-class citizens will decrease, the number of people in the rich and poor categories will increase. The reason for this is the decrease in the employment of the company or the reduction in employee salaries, the decrease in the relationship of the working population with money compared to the previous period of the pandemic. Another problem is that the interest rates are set low by the government and some ghost companies are offered loans with low-interest rates. Such companies do not produce and cannot contribute to the economic cycle. It is not the right attitude to transfer cash to such companies. According to the World Bank (2020), Before the pandemic crisis, emerging and developing economies were showing a weak growth chart. The impact of COVID-19 will further increase these challenges. There are many applications that need to be implemented in the short and long term. Some of these are supporting the private sector, strengthening health services, building new economic policies, and even giving people money directly if necessary. While these transactions are carried out, the main goal is to continue sustainability in the economy. Firms, businesses that provide basic services, and citizens should be supported financially and morally. According to Pak et al. (2020), Financial markets are expected to remain volatile as the continuation of the pandemic will continue to disrupt economic activity and adversely affect sectors such as the manufacturing sector and the service sector in developing countries. Questions about whether the fluctuations in this process will be a short-term effect or a long-lasting crisis have not yet been answered. The continuation of the spread of the virus in this way will cause the restrictions to continue and will cause the cash flow in the markets to move downward. The opinions of economists and experts on the coronavirus and economic depression are as stated above. It seems that depending on the events taking place in the near future, the economic developments in the world and the success of the studies in the field of health will be directly proportional. Finding a highly successful treatment against Covid-19 will also relieve the world economy. Especially in this period when the world economy is dragged into a great depression, good news from the health world can change the whole order again.

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Reference List

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?Elegant, N. X. (2020, December 14). COVID-era exports are fueling China's economic recovery. What happens when the pandemic ends? Retrieved January 3, 2021, from https://fortune.com/2020/12/13/china-economy-growth-covid-export-demand/

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?Meyer, S. (2020, November 13). Understanding the COVID-19 Effect on E-commerce. Retrieved January 14, 2021, from https://www.bigcommerce.com/blog/covid-19-ecommerce/#understanding-panic-buying-and-coronavirus

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