"We Envision Growth Strategies Most Suited
to Your Business"

Globalization During Covid-19: A Boon Until Last Year, But a Bane Today

April 16, 2020 | Healthcare

Globalization is a concept that revolves around the trade and movement of goods and people across countries. It refers to the exchange of cultures, practices, as well as resources across the globe. Although it can be defined in numerous ways, there is one thing that is common in all definitions and it is the interdependency of economies on each other. The interdependency is derived through trade activities as well as tourism. Even though the history of globalization can be panned out to hundreds of years ago, it truly entered the fray in the 20th century.


In Retrospect, Epidemics have Always Brought Down Economies…


The human race has experienced several disease outbreaks since evolution. The ‘swine flu’ pandemic (2009-2010), SARS epidemic (2002-2004), and the infamous pandemic of yesteryears, ‘Ebola virus’ (2014-2016); all have had their respective toll on the global economy. But nothing has quite taken us aback as the ongoing corona virus outbreak. In an era of exceptional scientific discoveries, it is somewhat ironic that there are absolutely zilch treatment options for this disease. Although ‘health’ remains the number one priority, the impact on globalization is nearly as severe; if not equally severe. From operative lockdowns to trade shutdowns, the global economy may potentially witness losses equalling trillions of dollars.


On December 31st 2019, the Chinese authorities communicated to the World Health Organization (WHO) about patients in Wuhan suffering from a rare form of pneumonia supposedly caused by an unknown virus. A month later, the country announced the death of a patient who was suffering from the misconceived ‘pneumonia,’ only to discover the diagnosis of COVID-19. Nobody would have even come close to predicting the impact that this was going to have on the global economy, let alone the country.


History Repeats Itself? : Analyzing the Similarities to the Infamous SARS Epidemic


The COVID-19 outbreak has created a feeling of déjà vu among people. With rapidly rising cases and constantly growing studies taken to minimize such highly infectious diseases, comparison with the severe acute respiratory syndrome (SARS) epidemic was somewhat inevitable. The world has changed on several frontiers in the post-SARS period, a primary reason why the economic impact of COVID-19 is projected to be more significant.


Out of the 8,437 SARS cases that were registered, 813 people succumbed to the disease. If you compare it to the Corona virus (136,938 deaths from 2,063,161 cases as of 16th April 2020). Over 80% of the world is currently under lockdown and this is a clear indication of ‘economic crisis.’


Although there were fewer SARS cases, the disease had a higher mortality rate as compared to the COVID-19. To put it in a clearer context, here are simplified numbers that shows a comparison between the two:









































Parameter



SARS



COVID-19 (as on 16th April, 2020)



Year of outbreak



2002



2019



Number of Global Cases



8,437



2,063,161



Number of Global Deaths



813



136,938



Number of Countries Affected



26



185



Basic reproduction number



2-5



2-3



Mortality rate



9.6%



6.6%



Although SARS had a higher mortality rate and was almost as infectious as COVID-19 (if not more), the current epidemic sees more number of cases and a significantly high number of deaths. According to the World Economic Forum, it took around 6 months for SARS cases to surpass 5,000 in Mainland China, whereas COVID-19 did the same within a month. There is no doubt that coronavirus is less deadly as compared to SARS but its high transmissibility ratio is what makes it hard to control.


Just How Much of an Impact Globalization has on the Rapid Spread of COVID-19?


The world economy is consequential to international trade activities as well as globally-operating supply chains. The economies of several countries are primarily dependant on aspects such as tourism, aviation, and a plethora of other industries. The term ‘globalization’ refers to free movement of goods and people. Given the current pandemic crisis, it is clear that to bring the virus under control, people have been advised to self-quarantine, which is contrasting to how globalization works.


Analysts have predicted that the initial ‘ignorance’ towards the disease and the constant globalization activities, especially in and to the originating country of China, is a primary reason behind such unprecedented spread of the virus. China is one of the largest economies in the world and evidently, several other countries are dependent on its resources, be it trade of goods and services, automobile, automotive, or even healthcare. To curb globalization, the Chinese government has imposed strict quarantine rules within the country as well as restricted international flights.


Here is an overview of the travel bans imposed by major economies across the world:



  • On March 17, the European Union banned non-essential travel to at least 26 European countries from the rest of the world for a period of 30 days.

  • By March 16, USA had banned the entry of foreign travellers from countries such as China, Iran, and others.

  • India has extended the ban on international commercial passenger services till April 14th 2020.

  • Australia has banned the travel of all non-residents and non-Australian citizens entering the country from March 19th


Global Economy Dangles on a String; Activities in China to Have a Major Say


China is, evidently, one of the largest economies in the world. Thus, alterations in operations within the country tend to have a direct impact on the global economy. China has made a massive contribution towards the resurgence in world economy since the SARS epidemic in 2002. In addition to this, China accounted for just over 4% of the global GDP and was the sixth largest economy in the world in the year 2002. China has shown robust growth over the last two decades. Identified as the second largest economy in the world, China currently accounts for 16% of the global GDP.


Some of the reasons why China is on the top:



  • Deemed as the ‘manufacturing’ hub of the world, China accounts for 27% of the global value-added manufacturing.

  • With contributions in diverse industries, that include consumer goods, information technology, and automotive, China has firmly established itself as a source of dependency for major economies across the world.

  • As on today, China is the one of the major suppliers of labour-intensive goods such as furniture and paper.

  • China is one of the largest smartphone market in the world since 2012. 

  • China accounts for around 27 percent of the global automotive production

  • 80% of the Active pharmaceutical ingredients (APIs) for the U.S. drugs are produced in China and India


Considering the above reasons, the economic growth in China has led to a tremendous rise in the number of Chinese people travelling abroad. Moreover, the number of overseas visits made by Chinese tourists has increased from 17 million in 2002 to 150 million in 2018. With all these numbers, we can only say that whatever happened in China has impacted the world to a large extent.


Will Globalization Suffer due to COVID-19?


Globalization is not only about the free movement of goods and people, it is more about the speed and scale of international business. There is no doubt about the fact that over the past few decades, this buzzword ‘globalization’ has mushroomed at unprecedented levels. Trade deals, developing economies, business travel, among others have significantly contributed to the spread of this novel infectious illness. This can be one of the reasons for such an immediate effect on the world economy. To say globalization will be affected by the COVID-19 would be an understatement. With global recession on the cards, the factors that have caused the rapid spread of COVID-19 will ultimately have a massive impact on the global economy. The WHO has reported that the  global economy is expected to witness losses close to a trillion, a figure that is much higher than the economic losses due to SARS epidemic (40$ billion). Here are some of the major industries that are likely to suffer from the corona virus pandemic:



  • According to the International Air Transport Association, the global airline industry is expected to lose $113 billion if the disease continues to spread

  • The crash due to the epidemic has wiped off around $9 trillion in global stocks already

  • The International Energy Agency (IEA) has estimated that the global oil demand is expected to decline by 20 percent due to the lockdowns in place in various countries


We are all wary of the possible outcomes and dangers of the ongoing pandemic, that are murkier as fears. Major countries across the world have completely shut down their respective trade activities. Many have restricted the movement of people within the countries as well as advising inbound travellers to self-quarantine. Several manufacturing plants have been shut down. One thing is clear, the economy has managed to survive through all of the World Wars and the Corona virus outbreak will just be a phase that we will overcome. Although globalization has contributed to the spread of the virus, once the epidemic is under control, globalization might, in fact, emerge as a pivotal factor in the recovery of the world economy.


Author’s Bio: Tanay Bhalla is a part of the very talented content team at Fortune Business Insights. He is a highly-driven writer with extensive experience in market research. Tanay specializes in blogs, articles and press releases.

Our Clients

Abbott
CJ_logo
Bio-Rad
Thales-logo
omron
kuhn_logo
We use cookies to enhance your experience. By continuing to visit this site you agree to our use of cookies . More info.
X