Global Economic Effects of COVID-19

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Empty Streets of Los Angeles. (Source:  NASA).
Empty Streets of Los Angeles. (Source: NASA).

November 1, 2021 | Originally published by Congressional Research Service on October 4, 2021

The COVID-19 viral pandemic is an unprecedented global phenomenon that is also a highly personal experience with wide-ranging effects. On September 20, 2021, U.S. viral deaths surpassed the 675,446 total from the 1918 Spanish flu, the previous worst U.S. pandemic-related death total on record. The pandemic has disrupted lives across all countries and communities and negatively affected global economic growth in 2020 beyond anything experienced in nearly a century. Estimates indicate the virus reduced global economic growth in 2020 to an annualized rate of around -3.2%, with a recovery of 6.0% projected for 2021. Global trade is estimated to have fallen by 5.3% in 2020 but is projected to grow by 8.0% in 2021. According to a consensus of forecasts, the economic downturn in 2020 was not as negative as initially estimated, due in part to the fiscal and monetary policies governments adopted in 2020. In most countries, economic growth fell sharply in the second quarter of 2020, rebounded quickly in the third quarter, and has been mostly positive since. Although lessening, the total global economic effects continue to mount. In particular, the prolonged nature of the health crisis is affecting the global economy beyond traditional measures, with potentially long-lasting and far-reaching repercussions. Economic forecasts reflect continuing risks to a sustained global recovery posed by a resurgence of infectious cases and potential inflationary pressures associated with pent-up consumer demand fueled by an increase in personal savings. On the supply side, shortages reflect lingering disruptions to labor markets, production and supply chain bottlenecks, disruptions in global energy markets, and shipping and transportation constraints that are adding to inflationary pressures.

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