Automated production and globalization decrease: How will COVID-19 affect the global economy?
Though it is quite early to evaluate the consequences of the COVID-19 pandemic on the global economy, it has already caused the economic stagnation. Factories temporarily closed and airline companies suspended most of their flights, as well as the oil prices and exchange rates have been fluctuating amid the coronavirus outbreak.
Experts say that many large businesses will leave the market once the worldwide quarantine is over. However, some companies will accept the challenge and will manage to adapt to the new world.
Thus, nearly a half of all firms worldwide are reconsidering their relations with suppliers amidst the coronavirus pandemic. Primarily, they intend to halt the working relations with the foreign partners and choose the local producers instead. Experts have come up with this conclusion after analyzing the recent worldwide opinion poll conducted by the Big Four audit firm Ernst & Young.
Most of the companies are already replacing their supply chains when it comes to medicine and majority of other industries, reported the German newspaper Die Welt. If this continues, there will be a partial departure from globalization in the coming years. Though it will be impossible for the companies to stop the foreign supplies completely, it is clear that there will no longer be the same large-scale globalization after the COVID-19 pandemic.
Labor-replacing automation is another unavoidable outcome of the novel coronavirus outbreak. Almost half of company bosses in 45 countries are speeding up plans to automate their businesses as workers are forced to stay at home in quarantine. Machines can replace human employees, since the latter proved to be unreliable during the pandemic. Already half of the world’s population is working remotely from home, and by the end of the quarantine, many people are risking losing their jobs. British government estimates that nearly 1.5 million people in the United Kingdom will be fired due to the automation of businesses.
It is possible that similar situation may happen in Kazakhstan as well. Kazakh Minister of Labor and Social Protection of the Population Birzhan Nurymbetov had previously said that the country’s labor market might become unstable due to the coronavirus crisis.
Meantime, the COVID-19 pandemic’s impact on the global economy continues to grow. The only effective way to contain the spread of coronavirus was to put people in quarantine. However, such measure turned out to be expensive. So far, the nationwide lockdown has cost France 60 billion euros (nearly US$65 billion) and it is not even the final amount since Europe is still fighting the coronavirus outbreak.
The question of whether the companies will be able to survive during the quarantine period remains open. The governments of the countries are coming up with various state programs and solutions in order to help the businesses hit by the coronavirus crisis. Many countries have abolished business taxes, issued subsidies and cancelled rent payments. Italy’s government has offered more than 400 billion euros (nearly US$435 billion) worth of liquidity and bank loans to companies hit by the COVID-19 pandemic. Kazakh government has allocated 300 billion tenge (nearly US$688 million) for the support of business sector.